Fiscal policy encompasses the principles and rules that guide government financial decisions about revenue, spending, and debt. For municipalities, fiscal policies might address: target tax increase limits, reserve adequacy levels, debt ceiling guidelines, user fee cost-recovery targets, capital financing approaches (debt vs. pay-as-you-go), and financial contingency provisions. Clear fiscal policies provide consistency across budget cycles and changing councils, help staff prepare budgets within understood parameters, and communicate financial management approach to residents and credit rating agencies. Fiscal policies should be formally adopted by council, regularly reviewed, and reported against. At federal and provincial levels, fiscal policy also addresses broader economic management—using government spending and taxation to influence economic activity (stimulus during recessions, restraint during inflation). Municipal fiscal policy is more narrowly focused on sustainable financial management given limited revenue tools and balanced budget requirements.