2019 Interim Operating and Capital Estimates
This Note is part of a series of Notes on key City issues to update City Council at the start of its 2018 – 2022 term.
City Council is required by December 31, 2018, to establish interim operating and capital budget estimates to ensure that the City has spending authority to deliver current services and meet existing contractual commitments from January 1, 2019, to the date when the 2019 operating and capital budgets are entered into the City’s financial system.
Given that 2019 is the first budget year under the new term of City Council, the operating budget will be approved later than in years with an established Council (by the end of March or April instead of February). City staff generally recommend interim estimates at a higher rate (33% vs 25%) in the first year of a new term to accommodate the prolonged interim period.
City Council will consider the 2019 interim operating and capital budget estimates in December 2018.
The City of Toronto Act, 2006 requires that the City annually adopt a budget including estimates of all sums required during the year to continue its business. The City’s Financial Control By-Law specifies that City Council must adopt an interim operating budget before the 1st day of January of the year in which the operating budget will be adopted.
City Council approves interim operating and capital budget estimates based on a percentage of the prior year’s approved budgets to provide sufficient funding authority to maintain ongoing operations and to continue work on approved capital projects until the new budgets are approved.
2019 Interim Operating Estimates
In typical years, interim estimates are based on 25 percent of the gross expenditure budget for City operations and corporate accounts, and 25 percent of the net budget for agencies, which provides sufficient funding authority and control through to the end of March when the year’s budget is typically approved and made available.
Given that 2019 is the first budget year under the new term of City Council, the budget will be approved by Council later than in a typical year. As a result, City staff will recommend an interim estimate based on 33 percent of the gross expenditure budget for City operations and agencies respectively.
The interim estimates are subsequently adjusted to account for specific contractual agreements and contract awards that are required to maintain ongoing operations. Most of the City’s agencies are partially funded by the City and can recover the majority of their expenditures through their own revenue sources. For example, Yonge-Dundas Square’s expenditures are offset through user fees and donations and do not require a 2019 interim budget from the City.
2019 Interim Capital Estimates
City Council’s approval of the 2019 interim capital budget estimates is required to provide requested cash flow funding, spending authority and control to continue work or commitment for the already approved capital projects until the 2019-2028 capital budget and plan is approved. This will enable staff to proceed with capital activities on previously approved projects that must continue during the first months of 2019.
It should be noted that no funding to start new and enhanced services or new capital projects will be included in the recommended 2019 interim estimates, as consideration for new funding is subject to the 2019 budget process.