Item - 2021.EX26.6
Tracking Status
- City Council adopted this item on October 1, 2021 without amendments.
- This item was considered by the Executive Committee on September 23, 2021 and adopted without amendment. It will be considered by City Council on October 1, 2021.
EX26.6 - Operating Variance Report for the Six Months Ended June 30, 2021
- Decision Type:
- ACTION
- Status:
- Adopted
- Wards:
- All
City Council Decision
City Council on October 1 and 4, 2021, adopted the following:
1. City Council approve the budget adjustments and any associated complement changes detailed in Appendix D1 and D2 to the report (September 9, 2021) from the Chief Financial Officer and Treasurer to amend the 2021 Approved Operating Budget, with no impact on the Net Operating Budget of the City, as well as recommended expenditure authority as detailed in Appendix D3 to the report (September 9, 2021)from the Chief Financial Officer and Treasurer.
Background Information (Committee)
https://www.toronto.ca/legdocs/mmis/2021/ex/bgrd/backgroundfile-170649.pdf
Motions (City Council)
Councillor Perks, on a Point of Order, stated that he would like to know if he can ask questions of the Mayor as the Item is an Executive Committee Item.
Councillor Thompson, on a Point of Order, stated that Councillor Perks would like to ask questions of the Mayor and asked the Speaker to clarify whether Councillor Perks would be entitled to an additional five minutes or whether question of the Mayor would have to be within the five minutes that Members get to ask questions.
EX26.6 - Operating Variance Report for the Six Months Ended June 30, 2021
- Decision Type:
- ACTION
- Status:
- Adopted
- Wards:
- All
Committee Recommendations
The Executive Committee recommends that:
1. City Council approve the budget adjustments and any associated complement changes detailed in Appendix D1 and D2 to the report (September 9, 2021) from the Chief Financial Officer and Treasurer to amend the 2021 Approved Operating Budget, with no impact on the Net Operating Budget of the City, as well as recommended expenditure authority as detailed in Appendix D3 to the report (September 9, 2021)from the Chief Financial Officer and Treasurer.
Origin
Summary
The purpose of this report is to provide City Council with the Operating Variance for the six months ended June 30, 2021 as well as projections to year-end. This report also requests City Council's approval for amendments to the 2021 Approved Operating Budget that have no impact on the City's 2021 Approved Net Operating Budget.
Since March of 2020, the City of Toronto has been experiencing significant financial impacts, both in the form of added costs and significant revenue losses as a direct result of the COVID-19 pandemic.
COVID-19 related financial impacts have been budgeted to a total $1.596 billion for the City of Toronto's 2021 Operating Budget. COVID-19 funding support applied to the City's 2021 Budget,sssfrom the Government of Canada and Province of Ontario in the form of Safe Restart Agreement (SRA), added Reaching Home (RH) funding and other funding programs total $1.521 billion in combined COVID-19 support funding, reflecting over 95% of budgeted COVID-19 funding requirements, reducing the 2021 year-end funding shortfall to $74.5 million.
In total, the City has benefited from approximately $2.6 billion in intergovernmental COVID-19 relief funding since the start of the pandemic, ensuring continuation of the City's critical frontline services.
Table 1 below details the budgeted 2021 City-wide COVID-19 related financial impacts against secured and assured COVID-19 support funding; and the resulting financial position that is reflected in the year-end variance projections:
Table 1: 2021 Projected COVID-19 Financial Impacts
Category ($M) |
Budgeted Impacts |
Funding Applied to 2021 |
2021 Net Funding Shortfall |
Transit |
796.4 |
721.9 |
(74.5) |
Municipal* |
459.7 |
459.7 |
|
Shelter |
281.3 |
281.3 |
|
Public Health** |
59.0 |
59.0 |
Variance reporting assumes full Public Health funding to Year-End, however Provincial funding commitments to date only reflect approximately 50% of expected 2021 costs
A formal funding commitment from the Province for remaining 2021 full year impacts of COVID-19 extraordinary costs and immunization costs is required |
City Tax Supported Programs |
1,596.4 |
1,521.9 |
(74.5) |
* Includes TCHC impact of $37.5M
** Based on Budgeted impacts and excludes greater impacts experienced in 2021 and immunization costs
While the City is currently reporting a 2021 budgeted funding shortfall of $74.5 million, over 95% of budgeted 2021 COVID-19 impacts have secured funding support from the Federal and Provincial governments through the first six months of the year and staff continue to expect that 2021 COVID-19 impacts will be fully funded by year-end.
As noted in the table above, full funding of Public Health extraordinary and immunization costs are expected based on Provincial assurances however current firm funding commitments only reflect 50% of expected costs to year-end. Firm funding commitments for the remaining costs are required otherwise the City's current 2021 net COVID-19 funding shortfall of $74.5 million will increase accordingly.
Tax Supported Programs:
The following table summarizes the anticipated year-end financial position of the City's Tax Supported Operations as of June 30, 2021 and the projection at year-end. This is primarily driven through a combination of a remaining COVID-19 funding shortfall for Transit, unconfirmed intergovernmental funding for projected costs associated with the City's Refugee Response and additional pressures primarily related to the continued financial impacts of COVID-19 that are offset by favourable Municipal Land Transfer Tax revenue resulting in an overall $93.7 million pressure projected for year-end for tax supported programs.
Table 2: Tax Supported Operating Variance Summary
Variance ($M) Favourable / (Unfavourable) |
2021 June YTD |
2021 Year-End Projection |
||||
Budget |
Actual |
Var |
Budget |
Actual |
Var |
|
Tax Supported Operating Variance Summary |
||||||
City Operations |
1,333.0 |
1,243.0 |
90.0 |
2,805.3 |
2,776.0 |
29.3 |
Agencies |
1,538.5 |
1,515.9 |
22.6 |
3,040.0 |
3,052.9 |
(12.8) |
Corporate Accounts |
(1,165.7) |
(1,175.1) |
9.4 |
(1,356.0) |
(1,278.4) |
(77.7) |
Total Variance |
1,705.8 |
1,583.7 |
122.0 |
4,489.3 |
4,550.5 |
(61.2) |
Less Toronto Building |
(7.9) |
(15.8) |
8.0 |
(16.1) |
(40.7) |
24.6 |
Less City Planning |
4.2 |
(2.4) |
6.6 |
13.3 |
5.5 |
7.9 |
Total Variance-Excluding Toronto Building/City Planning |
1,709.4 |
1,602.0 |
107.4 |
4,492.1 |
4,585.8 |
(93.7) |
% of Gross Budget |
|
|
1.9%
|
|
|
0.8%
|
Note: Rate supported programs and Toronto Community Housing Corporation variance information is not reflected in the table above, which details Tax Supported Programs only
Six Month Year-to-Date and Projected Year-End Spending Results:
As noted in Table 2 above, for the six months ended June 30, 2021, Tax Supported Operations experienced a favourable net variance of $107.4 million or 1.9% of planned expenditures adjusted for Toronto Building and City Planning. It is important to note that the June 30th experience is a snapshot in time and the year-end projection is based on current and expected COVID-19 impacts. The continued impact of COVID-19 and any deviation from expectations as a result of a fourth wave will impact variance projections. Any changes will be reflected in variance reporting for the nine months ending September 30, 2021.
The variance is primarily attributable to underspending City Divisions, Agencies and Non-Program Revenues partially offset by the timing of receipt of COVID-19 related Federal and Provincial funds through the first six months of 2021, as compared to initial calendarization. The impacts on the year-to-date results are reflected in the following areas:
- Non-Program Revenues: A favourable year-to-date net variance of $27.3 million due to higher than anticipated Municipal Land Transfer Tax revenues due to increased sales activity in the period, partially offset by a timing difference between budgeted and actual receipt of Safe Restart Agreement funding. In addition, impacts from COVID-19 have resulted in lower than planned revenues for Interest and Investment Earnings, Parking Tag Revenues and Casino Woodbine.
- Toronto Transit Commission - Conventional Service: A favourable year to date net variance of $15.4 million is mainly attributable to continued expenditure management where possible, which was partially offset by underachieved revenue due to the impact of COVID-19 on ridership.
- City wide expenditure savings due to COVID-19 also contributed to the favourable year-to-date variance. For example, Parks Forestry and Recreation incurred COVID-19 related underspending including the cancellation of recreation programming that was partially offset by revenue losses from registration sales; permit revenues; and other user fees, all driven by the requirement for PFR to close community facilities and parks during the COVID-19 pandemic.
For year-end, the City is projecting an unfavourable variance of $93.7 million or 0.6% of the 2021 Gross Operating Budget, adjusted for Toronto Building and City Planning. The unfavourable variance is primarily due to the COVID-19 funding shortfall for Transit related pressures and outstanding intergovernmental funding confirmation for the City's Refugee Response. In addition, the City is anticipating increased pressure from the potential upcoming wave of COVID-19, with an expectation of both increased expenses and lost revenue. The increased pressure will be offset by outperforming Municipal Land Transfer Tax from increased sales activity projected in 2021.
Rate Supported Programs:
Rate Supported Programs reported a favourable year-to-date variance of $8.6 million. The favourable variance is attributed to lower than budgeted expenditures from Toronto Water and Solid Waste Management Services which is partially offset from lower than planned revenue in Toronto Parking Authority. At year-end, a favourable projected variance is anticipated to be $10.2 million, again primarily driven by lower than budgeted expenditures from Toronto Water and Solid Waste Management Services.
Rate Supported Programs are funded entirely by the user fees that are used to pay for the services provided and the infrastructure to deliver them. Solid Waste Management Services and Toronto Water's respective year-end surpluses, if any, must be transferred to the Wastewater and Water Stabilization Reserves and Waste Management Reserve Fund, respectively, to finance capital investments and ongoing capital repairs and maintenance
Table 3: Rate Supported Operating Variance Summary
Variance ($M) Favourable / (Unfavourable) |
2021 June YTD |
2021 Year-End Projection |
||||
Budget |
Actual |
Var |
Budget |
Actual |
Var |
|
Solid Waste Management Services |
(8.3) |
(18.4) |
10.2 |
0.0 |
(4.9) |
4.9 |
Toronto Parking Authority |
3.6 |
6.5 |
(2.9) |
2.2 |
9.5 |
(7.3) |
Toronto Water |
9.0 |
7.6 |
1.4 |
0.0 |
(12.6) |
12.6 |
Total Variance |
4.3 |
(4.3) |
8.6 |
2.2 |
(8.0) |
10.2 |
Background Information
https://www.toronto.ca/legdocs/mmis/2021/ex/bgrd/backgroundfile-170649.pdf