Item - 2014.EX44.37

The Executive Committee recommends that:

1.         City Council approve the budget adjustments detailed in Appendix F to the report (July 21, 2014) from the Deputy City Manager and Chief Financial Officer to amend the 2014 Approved Operating Budget between Programs that have no impact to the 2014 Approved Net Operating Budget.

2.         City Council request the Toronto Police Services Board to forward a report to the Deputy City Manager and Chief Financial Officer by September 25, 2014 providing an explanation of the decline in the number of Provincial Offences Tickets being issued between January 2012 to date, outlining the forecasted number of tickets to be issued in 2014 and 2015, as well as identifying steps the Service is taking to address the declining volume of tickets.

The purpose of this report is to provide Council with the City of Toronto Operating Variance for the five-month period ended May 31, 2014 as well as year-end projections and to request Council's approval for amendments to the 2014 Approved Operating Budget between Programs that have no net impact to the 2014 Approved Net Operating Budget to ensure accurate reporting and financial accountability.

For the five-month period ended May 31, 2014, Tax Supported Operations reported a favourable net variance of $37.004 million or 2.4 percent, as noted in Table 1 below.

Under-spending was driven largely by salary and benefit savings from vacant positions and a reduction in caseload for Toronto Employment and Social Services. Higher than budgeted revenue from permit applications for Toronto Building, Toronto Hydro Dividend Income and the Municipal Land Transfer Tax has also contributed to the favourable net variance for the five month period.  The under-spending was partially offset by over-expenditures for Tax Deficiencies, City Planning and the Vacancy Rebate Program.

Projections indicate that the year-end position will result in a net favourable variance of $1.176 million. The year-end projection is primarily due to projected continuation of salary and benefit savings from vacant positions and reduction in caseload for Toronto Employment and Social Services to year-end. Higher than budgeted revenue from permit applications for Toronto Building, Toronto Hydro Dividend Income and the Municipal Land Transfer Tax realized in the five month period will be maintained to year-end.

The favourable variance noted above will be partially off-set by projected under-achieved net revenue from Court Services ($27.053 million), Toronto Transit Commission Conventional Service ($8.0 million) and Supplementary Taxes ($8.0 million).

Table 2 below summarizes Rate Supported Program net variances:

The year-to-date favourable net variance of $0.756 million was driven by the Toronto Parking Authority's under-spending of $0.633 million largely from savings in salaries and benefits for part time cashiers and lower maintenance costs. In addition, Solid Waste Management Services was under-spent by $0.389 million primarily due to lower gross expenditures for various items, mainly driven by delayed payments for waste disposal in alternative landfills and contracted processing due to the billing process.

Toronto Water reported an over-expenditure of $0.267 million mainly due to higher than budgeted utility costs from the colder than expected winter as well as fluctuation in hydro use associated with wastewater treatment process and water transmission and haulage costs of biosolids.

Rate Supported Programs collectively project year-end net under-spending of $10.437 million, primarily from Toronto Water due to higher than budgeted revenues from private water agreements, additional recoveries for new service connections and associated user fees.

Table 3 below summarizes the vacancy rate for the five months ended May 31, 2014 and projections to year-end.

As of May 31, 2014, the City recorded a vacancy rate of 3.2 percent after gapping for an approved complement of 53,023.3 positions.  The forecasted year-end vacancy rate after gapping is projected to be 0.5 percent for an approved complement of 52,689.6 positions.  A more detailed analysis is provided in the Approved Complement Section of this report.