Item - 2019.EX7.18

City Council considered Items EX7.14, EX7.15 and EX7.18 together.

The Executive Committee recommends that:

1.  City Council approve the budget adjustments and any associated complement changes detailed in Appendix D1, D2 and D3 to the report (June 14, 2019) from the Chief Financial Officer and Treasurer to amend the 2019 Approved Operating Budget, such adjustments to have no impact on the 2019 Approved Net Operating Budget of the City.

The purpose of this report is to provide City Council with the Operating Variance for the four months ended April 30, 2019 as well as projections to year-end. This report also requests City Council's approval for amendments to the 2019 Approved Operating Budget that have no impact on the City's 2019 Approved Net Operating Budget.

The following table summarizes the financial position of the City's Tax Supported Operations as of April 30, 2019 and the projection at year-end:

Table 1: Tax Supported Operating Variance Summary

* In accordance with the Building Code Act, any surplus from Toronto Building must be contributed to the Building Code Act Service Improvement Reserve Fund.

Year-to-Date and Year-End Spending Results:

As noted in Table 1 above, for the four months ended April 30, 2019 Tax Supported Operations experienced a favourable net variance of $68.675 million or 4.3 percent of planned expenditures. The key factors contributing to the favourable year-to-date variance are:

- Year-to-date under expenditure in City Operations due to lower than planned salary and benefits from vacant positions, partially offset by lower revenue than planned revenue

- Favourable Corporate revenue, primarily from Municipal Land Transfer Tax and Interest/Investment Earnings.

 
For year-end, the City is projecting a net favourable variance of $22.232 million or 0.5 percent of the 2019 Approved Operating Budget.

An overview of the key variance drivers can be found in the "Comments" section of this report as well as in a detailed summary provided in Appendix E.

Rate Supported Programs:

Rate Supported Programs reported a favourable year-to-date variance of $22.510 million. The favourable variance is attributed to gross under expenditures on salary and benefits from vacant positions and earlier than planned receipt of revenue. Consistent with year-to-date results, the favourable year-end projected variance is $20.614 million that is primarily driven by gross under spending in Toronto Water.

Table 2: Year-To-Date Rate Supported Operating Variance Summary

Rate Supported Programs are funded entirely by the user fees that are used to pay for the services provided and the infrastructure to deliver them. Solid Waste Management Services and Toronto Water's respective year-end surpluses, if any, must be transferred to the Wastewater and Water Stabilization Reserves and Waste Management Reserve Fund, respectively, to finance capital investments and ongoing operations.

The recommended budget adjustments in Appendix D1, D2 and D3 are fiscally neutral to the 2019 Approved Net Operating Budget.