City councillors got some good news Monday night.
Treasurer Jim Lang reported the city’s general operating budget has a surplus of almost half a million dollars for 2017.
“In any year, many individual accounts and areas will experience surpluses and deficits …” Lang said in a report to council. “This is the nature of uncertainty inherent in all budgets.”
To help buffer that uncertainty, he noted, the city maintains a tax rate stabilization reserve account.
Lang cited a few areas that were over-budget. The most significant was the cost of tax appeals; in 2017, that budget item was $1.233 million over budget as significant multi-year appeals were completed in what the city fears is a trend that will continue.
On top of that, the city’s winter control budget was overspent by $400,000. That was attributed to above-normal snowfall and freeze-thaw conditions.
About $150,000 more than expected was also spent on transit. Officials say this is due to the ‘actual’ cost of the new contract, “higher than budget staff costs for contract monitoring” and the decline in revenue from Orillia Square mall.
In addition, $132,000 less than expected was received in the ‘penalty and interest on tax receivable’ due to a high level of property sales forcing the payment of outstanding taxes.
Thankfully, said Lang, those shortfalls were more than offset by cost-savings and increased revenue generation. Lang reported that city staff spent $1,100,000 below expense budget and above revenue budget. He said a variety of short-term issues created the savings or added revenue including “salary gapping” in several departments in addition to higher-than-expected revenue in both provincial offences and planning.
Additionally, the province provided a second transitional grant payment to off-set the cost of legislative changes to assessment, which resulted in $473,000 in unexpected revenue.
And more than $440,000 was brought in through supplemental taxes for new assessments on properties that were not included in the regular tax billing.
Lang also noted that in 2017, more than 60 capital projects were completed, returning almost $700,000 in surplus funds to reserves.
Finally, policing costs were lower than expected – sort of. Labour negotiations for the OPP, covering multiple years, were settled in 2017. To ensure the city’s budget was sufficient to cover the settlement, the municipality had been budgeting based on estimated costs. The years 2015 and 2016 have been reconciled, noted Lang, resulting in a savings from the anticipated costs. A combined surplus of approximately $315,000 for the two years is no longer required and may be transferred to a reserve account.
Overall, that means the city has an operating surplus of about $468,000. Council voted to heed Lang’s advice to put that money into the tax rate stabilization reserve and to put the $315,000 set aside for policing expenditures into the major capital facilities reserve.
“The major capital facilities reserve is currently providing funds to several major capital projects and is in a deficit of $45 million,” noted Lang’s report. “Although payments of $8 million annually are being contributed into this reserve, the balance will remain negative for several years. Any additional contributions made into the reserve will reduce the outstanding balance.”
Orillia Mayor Steve Clarke said the surplus is good news. "I'd like to commend staff for prudence," he said. "My hat's off to staff."
