Item - 2026.EX33.8

The Chief Financial Officer and Treasurer recommends that:

1. City Council approve in-year budget adjustments to Previously Approved Capital Budget and Plan, as detailed in Appendix 2.

The purpose of this report is to provide City Council with the City of Toronto capital spending for the four-month period ended April 30, 2026, as well as the projected 2026 year-end expenditures. Furthermore, this report seeks Council's approval for in-year budget adjustments to the previously approved 2026–2035 Capital Budget and Plan as outlined in Appendix 2 of this report.

Table 1 below summarizes the City's 2026 actual capital expenditures compared with the 2026 Approved Capital Budget for the four-month period ended April 30, 2026, and the projected expenditures by year-end, December 31, 2026.

Table 1: Capital Variance Summary

Capital spending for the first four months of 2026 totaled $1.106 billion, representing 18.4% of the 2026 Approved Capital Budget and an improvement over the five-year historical average of 14.0% for the same period. This stronger-than-historical spending performance is a positive indicator as the City progresses through the fiscal year. By year-end, City Divisions and Agencies are projected to spend $5.417 billion, representing 89.9% of the 2026 Approved Capital Budget.

Impact of Buy Ontario Act on Capital Projects

Despite strong year-end spending projections at the four-month mark, the City may face implementation challenges due to the Buy Ontario Act, which was adopted by City Council through item 2026.CC41.6, and effective for municipalities on May 15, 2026. The Buy Ontario Act's Municipal Buy Ontario Procurement Directive applies to new capital infrastructure procurements, requiring solicitation documents to include a list of Major Goods and Services and suppliers to submit a Domestic Supply Chain Plan identifying whether these goods and services will be sourced from Ontario or Canada. The new procurement requirements may result in delays, affecting project delivery due to extended procurement timelines which could result in deferring project expenditures to later in the year or into future fiscal periods. The primary operational impacts expected to affect project delivery include:

Extended Procurement Timelines: Increased cycle times are anticipated due to the additional time required to identify Major Goods and Services, conduct market research on domestic availability, and allow suppliers sufficient time to prepare comprehensive Domestic Supply Chain Plans.

Potential for Capital Cost Escalation: Giving preference to the highest-scoring Domestic Supply Chain Plans may impact bid prices, with the specific financial impact varying by construction sector and the provincial evaluation approach utilized.

As project delivery progresses throughout the year, City Divisions and Agencies will continue to monitor these impacts and update their spending projections accordingly.

The capital expenditures in the first four months of 2026 totalled $1.106 billion and year-end expenditures are anticipated to be at $5.417 billion or 89.9% of the total 2026 Adjusted Capital budget.

Appendix 1 summarizes the Year-To-Date spending in the first four months of 2026 and the projected year-end spending by City Divisions and Agencies.

Appendix 2 outlines the recommended in-year adjustments to the previously approved Capital Budget and Plan. These include total additional funding of $1.365 billion, offset by funding reductions of $93.5 million, as well as accelerations of $125.3 million from future years, partially offset by deferrals of $56.8 million. Overall, these adjustments result in a net reduction of $22.0 million in debt funding.