Item - 2014.EX43.28

Tracking Status

  • City Council adopted this item on July 8, 2014 with amendments.
  • This item was considered by the Executive Committee on July 2, 2014 and adopted without amendment. It will be considered by City Council on July 8, 2014.

EX43.28 - Operating Variance Report for the Year Ended December 31, 2013

Decision Type:
ACTION
Status:
Amended
Wards:
All

City Council Decision

City Council on July 8, 9, 10 and 11, 2014, adopted the following:

 

1.         City Council receive the transmittal letter (June 20, 2014) from the Budget Committee for information.

 

2.         City Council direct the City Manager to work with the Chief Executive Officer, Toronto Transit Commission to develop a five year funding scope for the Toronto Transit Commission to allow for the use of year-end variances in Toronto Transit Commission operating budget allocations to assist in long-term service planning and operations, and to report out through the 2015 budget process.

Background Information (Committee)

(June 20, 2014) Letter from the Budget Committee on Operating Variance Report for the Year Ended December 31, 2013
https://www.toronto.ca/legdocs/mmis/2014/ex/bgrd/backgroundfile-70892.htm
(June 4, 2014) Report and Appendices A to E from the Deputy City Manager and Chief Financial Officer on Operating Variance Report for the Year Ended December 31, 2013
https://www.toronto.ca/legdocs/mmis/2014/ex/bgrd/backgroundfile-70915.pdf

Background Information (City Council)

(July 8, 2014) Memo from the City Manager and the Deputy City Manager and Chief Financial Officer on Toronto Transit Commission Request to Retain Operating Surplus (EX43.28c)
https://www.toronto.ca/legdocs/mmis/2014/cc/bgrd/backgroundfile-71307.pdf

Motions (City Council)

1 - Motion to Amend Item moved by Councillor Karen Stintz (Lost)

That City Council delete the Executive Committee Recommendation:

 

Recommendation to be deleted

 

1.         City Council receive the item for information.

 

And instead adopt the following new recommendations:

 

1.         That, notwithstanding the Council policy on the disposition of surplus, City Council establish a TTC Fare Increase Mitigation Reserve Fund of $47.7 million to mitigate future TTC fare increases, and allocate the funds to such reserve from appropriate 2013 operating budget surplus discretionary reserve fund accounts, as determined by the Deputy City Manager and Chief Financial Officer.

 

2.         City Council direct that Chapter 227, Reserves and Reserve Funds, of the Toronto Municipal Code be amended as necessary to provide for the reallocation of the funds and the establishment of the Reserve Fund.

Vote (Amend Item) Jul-10-2014 7:04 PM

Result: Lost Majority Required - EX43.28 - Stintz - motion 1
Total members that voted Yes: 5 Members that voted Yes are Michelle Berardinetti, Josh Colle, Sarah Doucette, Mary-Margaret McMahon, Karen Stintz
Total members that voted No: 24 Members that voted No are Maria Augimeri, Shelley Carroll, Raymond Cho, Janet Davis, Glenn De Baeremaeker, Mike Del Grande, Frank Di Giorgio, John Filion, Paula Fletcher, Norman Kelly, Mike Layton, Chin Lee, Peter Leon, James Maloney, Josh Matlow, Pam McConnell, Joe Mihevc, Denzil Minnan-Wong, Frances Nunziata (Chair), Gord Perks, Ceta Ramkhalawansingh, Jaye Robinson, David Shiner, Michael Thompson
Total members that were Absent: 16 Members that were absent are Paul Ainslie, Ana Bail„o, Gary Crawford, Vincent Crisanti, Doug Ford, Rob Ford, Mary Fragedakis, Mark Grimes, Gloria Lindsay Luby, Giorgio Mammoliti, Ron Moeser, Cesar Palacio, John Parker, James Pasternak, Anthony Perruzza, Kristyn Wong-Tam

2 - Motion to Amend Item moved by Councillor Gord Perks (Lost)

That City Council delete the Executive Committee Recommendation:

 

Recommendation to be deleted

 

1.         City Council receive the item for information.

 

And instead adopt the following new recommendation:

 

1.         City Council allocate $47.7 million to the Toronto Transit Commission Stabilization Reserve.

 

2.         City Council authorize an additional $47.7 million of debt financing for the 2014 capital budget.

Vote (Amend Item) Jul-10-2014 7:05 PM

Result: Lost Majority Required - EX43.28 - Perks - motion 2
Total members that voted Yes: 4 Members that voted Yes are Sarah Doucette, Mike Layton, Gord Perks, Ceta Ramkhalawansingh
Total members that voted No: 25 Members that voted No are Maria Augimeri, Michelle Berardinetti, Shelley Carroll, Raymond Cho, Josh Colle, Janet Davis, Glenn De Baeremaeker, Mike Del Grande, Frank Di Giorgio, John Filion, Paula Fletcher, Norman Kelly, Chin Lee, Peter Leon, James Maloney, Josh Matlow, Pam McConnell, Mary-Margaret McMahon, Joe Mihevc, Denzil Minnan-Wong, Frances Nunziata (Chair), Jaye Robinson, David Shiner, Karen Stintz, Michael Thompson
Total members that were Absent: 16 Members that were absent are Paul Ainslie, Ana Bail„o, Gary Crawford, Vincent Crisanti, Doug Ford, Rob Ford, Mary Fragedakis, Mark Grimes, Gloria Lindsay Luby, Giorgio Mammoliti, Ron Moeser, Cesar Palacio, John Parker, James Pasternak, Anthony Perruzza, Kristyn Wong-Tam

3 - Motion to Amend Item (Additional) moved by Councillor Maria Augimeri (Carried)

That City Council direct the City Manager to work with the Chief Executive Officer, TTC to develop a five year funding scope for the TTC to allow for the use of year-end variances in TTC operating budget allocations to assist in long-term service planning and operations, and to report out through the 2015 budget process.

Vote (Amend Item (Additional)) Jul-10-2014 7:06 PM

Result: Carried Majority Required - EX43.28 - Augimeri - motion 3
Total members that voted Yes: 26 Members that voted Yes are Maria Augimeri, Michelle Berardinetti, Shelley Carroll, Raymond Cho, Janet Davis, Glenn De Baeremaeker, Mike Del Grande, Frank Di Giorgio, Sarah Doucette, John Filion, Paula Fletcher, Norman Kelly, Mike Layton, Chin Lee, Peter Leon, Josh Matlow, Pam McConnell, Mary-Margaret McMahon, Joe Mihevc, Denzil Minnan-Wong, Frances Nunziata (Chair), Gord Perks, Ceta Ramkhalawansingh, David Shiner, Karen Stintz, Michael Thompson
Total members that voted No: 3 Members that voted No are Josh Colle, James Maloney, Jaye Robinson
Total members that were Absent: 16 Members that were absent are Paul Ainslie, Ana Bail„o, Gary Crawford, Vincent Crisanti, Doug Ford, Rob Ford, Mary Fragedakis, Mark Grimes, Gloria Lindsay Luby, Giorgio Mammoliti, Ron Moeser, Cesar Palacio, John Parker, James Pasternak, Anthony Perruzza, Kristyn Wong-Tam

4a - Motion to Amend Item moved by Councillor David Shiner (Withdrawn)

That, if motion 1 by Councillor Stintz carries, City Council direct that the balance of the surplus be placed in the Tax Rate Stabilization Reserve to mitigate future tax increases.


4b - Motion to Amend Item moved by Councillor David Shiner (Withdrawn)

That, if motion 2 by Councillor Perks carries, City Council direct that the balance of the surplus be placed in the Tax Rate Stabilization Reserve to mitigate future tax increases.


Motion to Withdraw a Motion moved by Councillor David Shiner (Carried)

That Councillor Shiner be permitted to withdraw motions 4a and 4b.

Vote (Withdraw a Motion) Jul-10-2014 7:03 PM

Result: Carried Majority Required - EX43.28 - Shiner - Withdraw motions 4a and 4b
Total members that voted Yes: 28 Members that voted Yes are Maria Augimeri, Michelle Berardinetti, Shelley Carroll, Raymond Cho, Josh Colle, Janet Davis, Glenn De Baeremaeker, Mike Del Grande, Frank Di Giorgio, Sarah Doucette, John Filion, Norman Kelly, Mike Layton, Chin Lee, Peter Leon, James Maloney, Josh Matlow, Pam McConnell, Mary-Margaret McMahon, Joe Mihevc, Denzil Minnan-Wong, Frances Nunziata (Chair), Gord Perks, Ceta Ramkhalawansingh, Jaye Robinson, David Shiner, Karen Stintz, Michael Thompson
Total members that voted No: 1 Members that voted No are Paula Fletcher
Total members that were Absent: 16 Members that were absent are Paul Ainslie, Ana Bail„o, Gary Crawford, Vincent Crisanti, Doug Ford, Rob Ford, Mary Fragedakis, Mark Grimes, Gloria Lindsay Luby, Giorgio Mammoliti, Ron Moeser, Cesar Palacio, John Parker, James Pasternak, Anthony Perruzza, Kristyn Wong-Tam

Motion to Adopt Item as Amended (Carried)

Vote (Adopt Item as Amended) Jul-10-2014 7:08 PM

Result: Carried Majority Required - EX43.28 - Adopt the item as amended
Total members that voted Yes: 29 Members that voted Yes are Maria Augimeri, Michelle Berardinetti, Shelley Carroll, Raymond Cho, Josh Colle, Janet Davis, Glenn De Baeremaeker, Mike Del Grande, Frank Di Giorgio, Sarah Doucette, John Filion, Paula Fletcher, Norman Kelly, Mike Layton, Chin Lee, Peter Leon, James Maloney, Josh Matlow, Pam McConnell, Mary-Margaret McMahon, Joe Mihevc, Denzil Minnan-Wong, Frances Nunziata (Chair), Gord Perks, Ceta Ramkhalawansingh, Jaye Robinson, David Shiner, Karen Stintz, Michael Thompson
Total members that voted No: 0 Members that voted No are
Total members that were Absent: 16 Members that were absent are Paul Ainslie, Ana Bail„o, Gary Crawford, Vincent Crisanti, Doug Ford, Rob Ford, Mary Fragedakis, Mark Grimes, Gloria Lindsay Luby, Giorgio Mammoliti, Ron Moeser, Cesar Palacio, John Parker, James Pasternak, Anthony Perruzza, Kristyn Wong-Tam

Point of Order by Councillor Karen Stintz

Councillor Stintz, rising on a Point of Order, asked the Speaker to rule on whether a motion 'notwithstanding the Council policy on the disposition of the surplus' would be in order on this Item.

Ruling by Speaker Frances Nunziata
Speaker Nunziata accepted the Point of Order and ruled that it would be in order.

28a - Request from the Toronto Transit Commission to Retain Its 2013 Operating Surplus

Background Information (Committee)
(June 2, 2014) Letter from the Chief Financial and Administration Officer, Toronto Transit Commission, forwarding Financial Statements for the year ended December 31, 2013 and recommendations regarding 2013 surplus
https://www.toronto.ca/legdocs/mmis/2014/ex/bgrd/backgroundfile-70723.pdf

28b - Multi-Year Impact of the Toronto Transit Commission's Request to Retain 2013 Operating Surplus

Background Information (Committee)
(June 16, 2014) Report from the Deputy City Manager and Chief Financial Officer on Multi-Year Impact of the Toronto Transit Commission's Request to Retain 2013 Operating Surplus
https://www.toronto.ca/legdocs/mmis/2014/ex/bgrd/backgroundfile-70722.pdf

EX43.28 - Operating Variance Report for the Year Ended December 31, 2013

Decision Type:
ACTION
Status:
Adopted
Wards:
All

Committee Recommendations

The Executive Committee recommends that:

 

1.         City Council receive the item for information.

Origin

(June 20, 2014) Letter from the Budget Committee

Summary

The purpose of this report is to provide Council with the City of Toronto's Operating Variance for the year ended December 31, 2013 and allocation of the 2013 year-end surplus.

 

The preliminary 2013 year-end operating position for Tax Supported Operations resulted in a net favourable variance of $168.084 million available for distribution after Council directions and legislative requirements are met.  Consistent with City Council's approved Surplus Management Policy, at least 75 percent of the surplus or $126.063 million of the 2013 final year-end operating results will be allocated to the Capital Financing Reserve and $42.021 million will be allocated to underfunded liabilities and/or reserve funds.  The 2013 Tax Supported Operating surplus represents only about 1.8 percent of the approved gross City Budget.

 

For the twelve-month period ended December 31, 2013, Tax Supported Operations are summarized in Table 1 below.

 

(See Table 1 of the Report dated June 4, 2014 from the Deputy City Manager and Chief Financial Officer)

 

Under-spending was driven largely by savings from:

           Lower than budgeted Toronto Transit Commission Conventional Services' expenditures for various items such as depreciation on capital assets, diesel fuel, certain healthcare benefits, maintenance costs for buses and streetcars and vacancies;

           Lower than planned Tax Deficiencies (i.e. write-offs from assessment appeals); and,

           A reduction in caseload for Toronto Employment and Social Services.

 

In addition, higher than budgeted revenue realized from permit applications for Toronto Building, Payment in Lieu of Taxes and the Municipal Land Transfer Tax contributed to the favourable net variance.

 

One program area reported a significant unfavourable variances in 2013.  Court Services ended 2013 with a deficit of about $15.5 million net due to lower ticket issuance and resulting fine revenues.

 

Rate Supported Programs, excluding the Toronto Parking Authority, reported a year-end net favourable variance of $62.956 million which will be returned to their respective program reserve funds.  The Toronto Parking Authority reported an unfavourable variance of $3.187 million net.

 

Table 2 below summarizes Rate Supported Program net variances:

 

(See Table 2 of the Report dated June 4, 2014 from the Deputy City Manager and Chief Financial Officer)

 

The year-end favourable net variance of $59.769 million was driven by Toronto Water's net under-spending of $52.437 million, primarily due to:

 

           Over-achieved revenues of $31.829 million from a less than expected decline in residential water consumption than originally forecasted;

           Higher than expected recoveries for new water and wastewater service connections; and,

           Lower gross expenditures of $20.608 million below expectations primarily due to under-spending in salaries and benefits for vacant positions.

 

Table 3 below summarizes the vacancy rate for the twelve months ended December 31, 2013. For year-end, the City recorded a vacancy rate of 2.6 percent after approved gapping which forms part of 2013 Budget adopted by Council.

 

(See Table 3 of the Report dated June 4, 2014 from the Deputy City Manager and Chief Financial Officer)

Background Information

(June 20, 2014) Letter from the Budget Committee on Operating Variance Report for the Year Ended December 31, 2013
https://www.toronto.ca/legdocs/mmis/2014/ex/bgrd/backgroundfile-70892.htm
(June 4, 2014) Report and Appendices A to E from the Deputy City Manager and Chief Financial Officer on Operating Variance Report for the Year Ended December 31, 2013
https://www.toronto.ca/legdocs/mmis/2014/ex/bgrd/backgroundfile-70915.pdf

Motions

Motion to Adopt Item moved by Councillor Gary Crawford (Carried)

That City Council adopt the recommendation in the the letter (June 20, 2014) from the Budget Committee (Item EX43.28).

28a - Request from the Toronto Transit Commission to Retain Its 2013 Operating Surplus

Origin
(June 2, 2014) Letter from the Chief Financial and Administration Officer, Toronto Transit Commission
Summary

In recommending approval of its Draft Consolidated Financial Statements for the Year Ended December 31, 2013 to the City's Audit Committee, the Toronto Transit Commission Board of Directors also made recommendations with respect to retaining its 2013 $47.7 million operating surplus.

 

Preliminary year-end financial statements indicated a 2013 year-end subsidy of $7.3 million. A number of regular year-end accounting adjustments largely based on actuarial estimates were made in finalizing this number, which is now $47.7 million. In 2013 the TTC spent less than what had been estimated in several areas, such as long-term liabilities for workplace safety, insurance benefits, accident claims payouts, retroactive pay, overhead costs to capital projects and administrative fees.

 

City of Toronto policy requires all surplus to go back to the City which essentially reduces the TTC’s subsidy for that year. This is a City of Toronto policy and applies to all agencies, boards and commissions of the City

 

The surplus cannot be reallocated to the TTC operating budget for one-time service increases because any service increase would need to be maintained year-over-year.

Background Information
(June 2, 2014) Letter from the Chief Financial and Administration Officer, Toronto Transit Commission, forwarding Financial Statements for the year ended December 31, 2013 and recommendations regarding 2013 surplus
https://www.toronto.ca/legdocs/mmis/2014/ex/bgrd/backgroundfile-70723.pdf

28b - Multi-Year Impact of the Toronto Transit Commission's Request to Retain 2013 Operating Surplus

Origin
(June 16, 2014) Report from the Deputy City Manager and Chief Financial Officer
Summary

The purpose of this report is to identify the multi-year financial impact on both the TTC's Operating Budget and 10-Year Capital Plan, arising from the Toronto Transit Commission's (TTC) request from their meeting of May 28, 2014 that Council approve that the TTC retain $47.7 million in 2013 operating surplus for the purpose of avoiding a fare increase for 2015.

 

This report will also clarify the use of City-wide operating surplus, with the City's Surplus Management Policy stating that at least 75 percent of the City-wide surplus is to be allocated the Capital Financing Reserve. Given a 2013 net favourable variance of $168.1 million, 75 percent or $126.1 million will be directed to the Capital Financing Reserve.  This reserve predominately funds TTC capital projects as part of the Capital Financing Strategy, with $252 million budgeted to fund TTC capital projects in 2014 alone.

 

In addition, it is proposed that $10.8 million of the 2013 surplus is to be used to fund TTC accident claim liabilities.

 

Accordingly, more than the entire 2013 TTC surplus of $47.7 million is already being re-invested back into the TTC. 

Background Information
(June 16, 2014) Report from the Deputy City Manager and Chief Financial Officer on Multi-Year Impact of the Toronto Transit Commission's Request to Retain 2013 Operating Surplus
https://www.toronto.ca/legdocs/mmis/2014/ex/bgrd/backgroundfile-70722.pdf
Source: Toronto City Clerk at www.toronto.ca/council