Item - 2025.EX26.4

The Executive Committee recommends that:

1. City Council approve the budget adjustments and any associated complement changes detailed in Appendix D to the report (September 15, 2025) from the Chief Financial Officer and Treasurer to amend the 2025 Approved Operating Budget, with no impact on the Net Operating Budget of the City.

2. City Council direct that the Active Benefits Plan for Management/Non-union employees, Accountability Officers and Elected Officials, be amended as outlined in Appendix H to the report (September 15, 2025) from the Chief Financial Officer and Treasurer and that the Pre-65 Retiree Benefit Plan for Management/Non-union-employees, Accountability Officers and Elected Officials, be amended, where applicable, for employees who retire on or after November 1, 2025.

The purpose of this report is to provide City Council with the Operating Variance for the six months ended June 30, 2025, as well as projections to the year-end, December 31, 2025. This report also requests City Council's approval for amendments to the 2025 Approved Operating Budget that have no impact on the City's Net Budget.

The following table summarizes the year-to-date financial position and year-end projections for the City's Tax-Supported Operations as of June 30, 2025.

Table 1: Tax-Supported Operating Variance Summary 

As detailed in Table 1 above, for the six-month period, Tax-Supported Operations experienced a favourable net variance of $31.7 million. An unfavourable net variance is projected at year-end of $105.4 million. These figures are adjusted for Toronto Building which, consistent with legislation has any achieved surplus allocated to appropriate reserves.

It is important to note that the financial information presented is as of June 30, which is a snapshot in time and the year-end projection is based on current and expected future activities as known and anticipated.

Rate-Supported Programs:

Rate-Supported Programs reported a favourable year-to-date net variance of $19.0 million. At year-end, Rate-Supported Programs are projecting a favourable variance of $44.4 million.

Table 2: Rate-Supported Operating Variance Summary 

The favourable year-to-date variance is driven by all three rate programs: Toronto Water, Toronto Parking Authority and Solid Waste Management Services, with the favourable projections to year-end mainly driven by Toronto Water.

Rate-Supported Programs are funded entirely by 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 Waste Management Reserve Fund and the Wastewater and Water Stabilization Reserves respectively, to finance capital investments and ongoing capital repairs and maintenance. Seventy-five percent (75%) of Toronto Parking Authority’s surplus is allocated to the City, with the remaining 25% reinvested in Toronto Parking Authority’s capital projects, which is consistent with an Income Sharing Agreement.

This report also includes recommendations to transfer cost-of-living adjustment/benefit cost provisions budgeted in the 2025 Non-Program Expenditure Budget, allocating budgeted funding to all applicable divisional budgets following ratification of the new four-year collective agreement; as well as further recommendations on proposed changes to the benefits plan for Management/Non-union employees, Accountability Officers and Elected Officials. The Management/Non-union benefit changes outlined in this report arise from a review of the benefit plan changes, following the conclusion of collective bargaining with Toronto Civic Employees’ Union Local 416, and Canadian Union of Public Employees Local 79.