The Budget Committee recommends to the Executive Committee that:

1.           City Council approve the budget adjustments detailed in Appendix F to the report (April 14, 2014) from the Deputy City Manager and Chief Financial Officer, to amend the 2014 Approved Operating Budget between Programs with no impact to the 2014 Approved Net Operating Budget.

2.           The Executive Committee request the Chair, Toronto Police Services Board to report to the Budget Committee explaining why there has been a drop in the number of tickets being issued.

As shown in Table 3 below, Tax Supported Programs' and Agencies' expenditures were under-spent by $60.283 million or 2.7% gross and $53.184 million or 5.7% net for the three-month period ended March 31, 2014.  Projections indicate that the 2014 year-end gross expenditures will be under-spent by $97.249 million or 1.0% with a net deficit of $1.783 million due largely to lower than expected revenues based on the most current information.

(See Table 3 of the Report dated April 14, 2014 from the Deputy City Manager and Chief Financial Officer)

City Operations reported gross under-spending of $48.327 million or 4.4% with a favourable net variance of $15.248 million or 3.5% as of March 31, 2014.  Major contributors of the net variance in the first quarter included:

•           $7.035 million for Toronto Building due to the sustained high volume of permit applications resulting from market anticipation of development charge increases.

•           $2.299 million for Shelter, Support and Housing Administration due to savings in salaries and benefits and higher than planned funding from the Community Homelessness Prevention Initiative.

•           $2.293 million for Toronto Employment and Social Services due to lower caseload, lower special diet expenditures and lower housing stabilization fund expenditures.

•           $1.526 million for the City Manager’s Office due to salary and benefit savings from vacant positions that were not filled.

•           $1.393 million for Toronto Fire Services due to fringe benefit savings and lower Workplace Safety Insurance Board payments.

•           $1.132 million for Economic Development and Culture due to timing of incurred salaries and benefits and contracted services, which will occur later in the year than planned.

•           ($1.060 million) for all others.

Current projections indicate that City Operation's 2014 year-end gross expenditures will be $102.239 million or 2.1% below budget; however this will result in a $8.269 million or 0.4% unfavourable net variance, largely due to under-achieved net revenue for Court Services of $27.066 million.

Agencies reported gross under-spending of $9.024 million or 1.1% and $3.668 million or 0.9% of planned net expenditures for the three months ended March 31, 2014.  The favourable net variance was comprised of:

•           $2.010 million for the Toronto Transit Commission combined services due to the timing of certain non-labour expenses and delays in filling positions coupled with lower than budgeted revenue.

•           $1.284 million for the Toronto Zoo due to operating initiatives being held back from starting until more certainty concerning revenue expectations were determined. 

•           $0.373 million for all others.

Agencies collectively project gross under-expenditures of $4.218 million or 0.1%, however this will result in a $4.895 million or 0.3% unfavourable net variance at year-end, largely due to currently projected under-achieved net revenue for the Toronto Transit Commission (conventional service) of $5.0 million or 0.9%.

Corporate Accounts were under-spent by $2.932 million or 0.8% gross with a favourable net variance of $34.270 million or 44.1% for the three months ended March 31, 2014.  The favourable net variance was largely the result of higher than budgeted net revenue of $20.956 million from the Municipal Land Transfer Tax due to an abnormal amount of large commercial property sales which closed in the first quarter of 2014, $5.621 million from Toronto Hydro Dividend Income and savings of $3.687 million for Solid Waste Management Rebates.

Corporate Accounts collectively are forecast to have year-end gross over-expenditures of $9.209 million or 0.7% but a favourable net variance of $11.382 million or 8.7% of the 2014 Approved Operating Budget primarily from increased Municipal Land Transfer Tax net revenue of $10.000 million and Toronto Hydro Dividend Income of $5.621 million, partially offset by higher Tax Deficiencies of $4.038 million.

Rate Supported Programs reported gross under-spending of $2.743 million or 2.2% and over-spending of $16.841 million or 29.5% net for the three-month period ended March 31, 2014.  The unfavourable variance was driven by Toronto Water which reported net over-spending of $15.490 million largely from higher than budgeted gross expenditures of $6.221 million attributed to increased utility costs from the extreme winter weather resulting in fluctuations in hydro use and under-achieved revenues of $9.269 million predominately due to the reversal of a significant 2013 year-end accrual for the sale of water that has not yet been fully realized or billed in 2014.

Rate Supported Programs collectively project year-end gross under-spending of $6.559 million or 0.5% resulting in a $9.876 million favourable net variance.  This net variance is primarily driven by Toronto Water's revenues that are projected to be over-achieved by $6.470 million by year-end, mainly due to higher than anticipated private water agreements, additional recoveries for new service connections and associated user fees.  Solid Waste Management Services is also projecting net under-spending of $5.838 million, primarily from salaries and benefits savings due to vacancies, lower tax expense due to re-assessment and lower contracted SSO processing costs.

Appendices A, B and C attached summarize net expenditures, gross expenditures, and revenues, respectively.  Appendices D and E provide a detailed assessment of the complement and strength for the three months ended March 31, 2014 and year-end projections.  Appendix F provides the in-year budget adjustments for the first quarter ended March 31, 2014.  Appendix G provides detailed variance explanations for City Programs and Agencies for the three months ended March 31, 2014 as well as projections to year-end.