Item - 2022.EX34.14

The Executive Committee recommends that:

1. City Council approve a budget transfer of $17.524 million from Other Corporate Expenses Account to Toronto Transit Commission, related to the transfer of a City held provision towards settled Toronto Transit Commission Cost of Living Adjustments.

2. City Council approve a one-time temporary withdrawal of $43.700 million from the Child Care Capital Reserve Fund (XR1103) to offset the timing difference between expenditures reflected in 2021 and provincial funding reimbursement reflected in 2022 and authorize the return of $43.700 million to this reserve consistent with provincial funding related to the transfer payment received in 2022.

3. City Council approve COVID-19 related obligations, deferred costs, and recommended allocations as detailed in Appendix D to the report (June 27, 2022) from the Chief Financial Officer and Treasurer.

The purpose of this report is to provide Council with the City of Toronto's Operating Variance results for the year ended December 31, 2021 and the City's financial position before and after receiving COVID-19 funding support.

The City's Tax Supported Operations final year-end experience was consistent with the 2021 balanced net budget following offsets to all COVID-19 financial impacts through a combination of secured federal and provincial funding support and offsetting internal City savings.

Since March of 2020, the City of Toronto, consistent with other major Canadian and Greater Toronto and Hamilton Area (GTHA) municipalities have 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.

The 2021 budget was again challenged by the financial impacts arising from the pandemic.  Added costs and revenue losses in 2021 attributed to COVID-19 totalled an estimated $1.9 billion prior to internal City savings and offsets with significant pressures continued to be experienced in Transit and Shelter services as well as within Corporate Revenues. 

- COVID-19 related net financial impacts totalled $1.627 billion after internal offsets and prior to COVID-19 support funding as reflected in table 1 below.

- Net COVID-19 pressures were addressed through COVID-19 funding support from the Government of Canada and Province of Ontario, mainly in the form of Safe Restart Agreement (SRA), added Reaching Home (RH) funding and other funding programs.

Table 1 below details the budgeted 2021 City-wide COVID-19 related financial impacts against secured 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

* Includes TCHC impact of $37.5 million

** Based on Budgeted impacts and excludes immunization costs for Public Health

Tax Supported Programs:

The following table summarizes the financial position of the City's Tax Supported Operations for year ended December 31, 2021.

Table 2:

*Includes Recommended Reallocations and Adjustments

As noted in Table 2 above, for the year ended December 31, 2021 Tax Supported Operations experienced no net variance following adjustments associated with council directed and legislated allocations; as well as adjustments for COVID-19 related obligations, deferred costs, and allocations.

Rate Supported Programs:

Rate Supported Programs reported a favourable year-end variance of $51.3 million. The favourable variance is attributed to lower than budgeted expenditures from Solid Waste Management due to reduced volumes and delays in organic processing facility expansion.  Revenues from Solid Waste Management were also favourable due to improved market rates for sale of recyclables, offset by losses from a Renewable Natural Gas project delay.

Parking Authority had a favourable net variance of $11.7 million mainly due to lower than expected salary costs, and favourable revenue in both on and off street parking.

Toronto Water also saw a net favourable variance resulting from lower water production, salary savings and lower than expected energy rates and consumption.  This was partially offset by unfavourable revenue driven by lower than anticipated sale of water.

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 Net Variance Summary ($ Millions)