Item - 2015.EX1.4

The purpose of this report is to provide Council with the City of Toronto Operating Variance for the nine-month period ended September 30, 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 ensure accurate reporting and financial accountability.

For the nine-month period ended September 30, 2014, Tax Supported Operations reported a net favourable variance of $112.775 million or 4.1%, as noted in Table 1 below.

The favourable year-to-date variance was driven largely by salary and benefit under-spending from vacant positions and a reduction in caseload for Ontario Works.  Higher than budgeted revenue from permit applications for Toronto Building, Toronto Hydro Dividend Income, Parking Tag and Enforcement and Operations and the Municipal Land Transfer Tax has also contributed to the favourable net variance.  The under-spending was partially offset by over-expenditures for Tax Deficiencies and Transportation Services.

Projections indicate that the year-end position will result in a net favourable variance of $98.370 million or 2.6%.  The projected decline in the net favourable variance compared to  the year-to-date is largely driven by net expenditure/revenue changes for Court Services, Parks, Forestry and Recreation, Shelter, Support and Housing Administration, Parking Tag Enforcement and Operations, Supplementary Taxes and Non-Program Revenue Budget contribution from the Toronto Parking Authority's net income sharing to the City.

T   Table 2 below summarizes Rate Supported Program net variances:

Rate Supported Programs collectively realized a year-to-date unfavourable net variance of $7.146 million or 7.4%.  Solid Waste Management Services reported net over-spending of $3.237 million primarily from under-achieved revenues due to lower paid tonnes at Green Lane, lower tonnes of contractor residual waste and lower than planned Divisional, school and yellow bag fees.  Toronto Water realized a net over-expenditure of $2.128 million owing largely to lower than budgeted revenues from the sale of water as a result of higher than normal rainfall, as well as colder temperatures during the summer months.  In addition, the Toronto Parking Authority reported a net deficit of $1.781 million as a result of weaker than anticipated on-street parking revenues.

Rate Supported Programs collectively project year-end net favourable variance of $3.826 million.  This change from the year-to-date actual is primarily driven by Solid Waste Management Services, which is forecasting a favourable year-end variance of $5.323 million.  The year-end net under-spending is driven by savings in salaries and benefits due to vacancies, lower costs for contracted processing, increased Provincial funding for recycling and higher tipping fee revenue from transfer stations.  Toronto Water is projecting a favourable variance of $3.218 million, mostly due to lower than planned salaries and benefits and partially offset by lower sales of water.  The favourable variances noted above will be partially off-set by the Toronto Parking Authority's net deficit of $4.715 million from continued lower on-street revenues.

Table 3 below summarizes the vacancy rate for the nine months ended September 30, 2014 and projections to year-end.

As of September 30, 2014, the City recorded a vacancy rate of 3.3% after gapping for an approved complement of 53,193.2 positions. The forecasted year-end vacancy rate after gapping is projected to be 1.5% for an approved complement of 52,701.2 positions. A more detailed analysis is provided in the Approved Complement Section of this report.

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