Strata Budgets: How They're Created and Approved

Every BC strata has to pass a budget every year. It's the council's single biggest piece of annual work and it's the document that determines what every owner pays in strata fees for the next twelve months. Done well, the strata budget BC process surfaces upcoming costs early, sets clear fee expectations, and lets the AGM happen without surprises. Done badly, it becomes a long fight at the AGM, fees swing wildly year to year, and council loses owner trust. The process is governed by SPA s. 103 and the mechanics are simple, but the work behind a good budget is real, and many stratas don't put enough time into it. Here's how it should go. We've sat at many Sea-to-Sky council tables and budget season tells you a lot about a strata's governance.

The two parts of a strata budget

A strata budget has two distinct components, and they're voted on as a single package at the AGM:

1. Operating budget. All the routine costs of running the strata for the next fiscal year. Insurance, utilities, management fees, snow removal, landscaping, repairs, supplies, professional fees, bank charges.
2. Contingency reserve fund contribution. The amount transferred from operating to the CRF each year under s. 96. Minimum 10% of operating expenses until CRF reaches 100% of operating expenses.

Strata fees for each unit are calculated by adding these two totals, then dividing by the strata's total unit entitlement. Each unit's monthly fee is their share of that total. Larger units (higher entitlement) pay more.

Some stratas also pass a separate special levy resolution at the same AGM under s. 108. That's a 3/4 vote and a different mechanic, covered in our special levies guide.

Building the budget: month by month

A good budget cycle starts roughly four months before the AGM. The rhythm we recommend:

• Month -4: treasurer and manager pull prior-year actuals and identify trends. Solicit vendor quotes for any major contract renewals.
• Month -3: draft v1 of the budget at a council meeting. Flag any line items that need investigation.
• Month -2: revise to v2 with new quotes locked in. Council reviews the draft and asks questions.
• Month -1: finalize v3. Council approves it for inclusion in the AGM notice.
• AGM notice: budget circulated to owners at least 2 weeks before the AGM under s. 45.
• AGM: vote.

If your strata starts budget work two weeks before the AGM, you're going to get a bad budget. The four-month cycle isn't optional if you want a defensible proposal.

Line items in a typical operating budget

A typical Sea-to-Sky strata operating budget has several large recurring buckets, insurance, management fees, utilities, repairs and maintenance, landscaping and snow, and the CRF contribution. Their relative share varies widely by building size, amenities, and age, so the right approach is to build each line from quotes and actuals rather than apply a percentage rule.

Specific line items to include:

• Property insurance premiums (annual, usually paid in lump sum)
• Liability insurance and directors' & officers' (D&O) coverage
• Strata management fees (flat monthly per contract)
• Accounting and audit fees (if audit budgeted)
• Bank charges and software costs
• Utilities (water, gas, electricity for common areas)
• Janitorial, landscaping, snow removal contracts
• Elevator, fire alarm, sprinkler maintenance contracts (if applicable)
• Repairs and maintenance (routine, not capital)
• Professional fees (legal, depreciation report annual update)
• Office supplies, postage, printing
• CRF contribution

Each line should be tied to a quote, contract, or recent actual. "Last year plus a small bump" is not a budget; it's wishful thinking.

Approving the budget at the AGM

At the AGM, the chair presents the proposed budget, owners ask questions, and a vote is taken. The threshold is a simple majority of votes cast (by unit entitlement). Council needs to be ready for the most common floor amendments:

• "Reduce repairs and maintenance"
• "Increase or decrease the CRF contribution"
• "Remove the budget for a specific project"
• "Defer the management fee increase"

Each amendment is debated, voted on separately, then the amended budget is voted on as a whole. If the package passes, fees are set for the year.

What happens if the budget fails

A failed budget vote isn't a crisis, but it's a problem to fix quickly. The mechanics:

1. Previous year's budget continues in effect. Owners pay the same fees as last year until a new budget passes.
2. Council calls a special general meeting within a reasonable time.
3. Revised budget circulated with the SGM notice, addressing the concerns that caused the AGM failure.
4. Re-vote at the SGM. Majority still required.

If the previous year's budget doesn't cover this year's actual costs, the operating fund will run a deficit. That deficit has to be addressed eventually under s. 105, usually by a special levy or fee increase once a new budget passes. Our year-end surplus and deficit post walks through the recovery options.

Budget failures are rare. We've seen CRT decisions where a council tried to implement fee increases without an approved budget and the tribunal ruled that the previous budget's fee schedule had to remain in force until a new one passed at SGM.

Common budgeting mistakes

We see the same mistakes year after year:

Mistake	Consequence	Fix
Copying last year's budget	Underbudgeting insurance	Get a real quote
Hiding CRF contribution	Reserve falls behind	Show CRF as a clear line
No vendor quotes	Surprises mid-year	Quote major contracts annually
Aggressive revenue assumptions	Operating deficit	Be realistic on interest, fees
No buffer	Mid-year levies	Build 3 to 5% contingency
AGM-first communication	Floor fights	Q&A session 1 week before

The biggest mistake is treating the budget as paperwork instead of as the strata's annual financial plan. A budget is a forecast, and the more rigorous the forecast, the smoother the next twelve months.

Tying the budget to the depreciation report

For most stratas, the depreciation report is the single biggest input to the CRF portion of the budget. The depreciation report sets out the expected capital costs over the next 30 years and the funding levels needed to meet them. The annual budget translates that long-term forecast into this year's CRF contribution.

If the depreciation report says the CRF needs to grow by a certain amount each year to stay on track, and the budget only funds a fraction of that, the CRF will fall behind. Council should review the depreciation report every budget cycle and adjust the CRF contribution accordingly.

Budget season is also accountability season

Council members preparing a budget often want to know whether the management line is in line with comparable Sea-to-Sky buildings. The ranges in how strata fees are calculated in BC are a useful sanity check before the AGM packet goes out.

The AGM is the once-a-year moment when owners pay close attention to council. A well-prepared budget builds credibility for the year ahead. A messy budget damages council's standing in ways that take a year to repair.

Our strata AGM guide covers the broader meeting mechanics, and our strata fees guide explains how the budget translates into each owner's monthly fee. For councils that want a second set of eyes on a draft budget before it goes out, reach out. We'll review it for free and flag anything that looks off.

Budgets and mid-year changes

Once approved at the AGM, the budget runs for the full fiscal year. Council cannot unilaterally raise fees mid-year. If costs blow through budget partway through, the options are:

• Absorb the variance if there's a buffer in the operating account
• Defer non-urgent spending to bring the year back into balance
• Special levy under s. 108 (3/4 vote at a special general meeting)
• Mid-year SGM to amend the budget (also a 3/4 vote in practice)

The first two are by far the most common. Most variance shows up in repairs and maintenance, where unbudgeted issues come up. A small buffer in the operating budget is the cleanest defense. The reason we build 3 to 5% contingency into every budget we draft is exactly this: to absorb the predictable amount of unpredictability without dragging the strata back to an SGM.

Communicating the budget to owners

The most effective thing a council can do to make AGM season smooth is to communicate proactively. We recommend:

• A budget summary letter sent with the AGM notice, in plain English
• A clear "what changed from last year" section with reasons
• The per-unit monthly fee impact stated explicitly
• A pre-AGM Q&A session, in person or by video, the week before the meeting
• Open-door treasurer office hours during budget season

Owners who feel informed don't bring destructive amendments to the floor. Owners who feel surprised do.