The purpose of this report is to provide City Council with the Operating Variance for the nine months ended September 30, 2023 as well as projections to year-end. This report also requests City Council's approval for amendments to the 2023 Approved Operating Budget and recommended expenditure authority that have no impact on the City's Net Budget. In 2023, the City continues to experience significant financial impacts, both in the form of added costs and revenue losses as a direct result of the lasting impact of the COVID-19 pandemic. As a result, the 2023 Operating Budget was balanced based on the expectation of continued COVID-19 support funding from the Government of Canada and Province of Ontario with a total budget amount of $932.8 million. To date, $53.7 million in 2023 COVID-19 support funding has been committed specific to Public Health costs, $4.5 million committed to Seniors Services and Long-Term Care with an additional $22.6 million for COVID related expenses in Shelters, Support & Housing Administration. In addition to COVID-19 support funding, the City has generated $33.7 million in offsets associated with projected COVID-19 impacts compared to budgeted estimates, resulting in a $818.3 million remaining COVID-19 funding shortfall in 2023. Table 1 in the following page details the budgeted 2023 City-wide COVID-19 related financial impacts against secured and assured COVID-19 support funding — and the resulting financial position that is reflected in the year-end variance projections: Table 1: 2023 Anticipated COVID-19 Financial Impacts COVID-19 Impacts ($Millions) 2023 Budget Committed Fed/Prov Funding Internal Offsets / Savings Remaining 2023 Shortfall Transit 366.4 366.4 Shelters 317.2 22.6 294.6 Other Municipal Pressures 161.9 4.5 157.4 Public Health 87.4 53.7 33.7 0 Total COVID-19 Impacts 932.8 80.8 33.7 818.3 Tax-Supported Programs: The following table summarizes the projected year-end financial position of the City's Tax-Supported Operations as of September 30, 2023. Table 2: Tax-Supported Operating Variance Summary Variance ($M) Favourable / (Unfavourable) 2023 Sept YTD 2023 Year-End Projection Budget Actual Var Budget Actual Var Tax-Supported Operating Variance Summary City Operations 2,245.6 2,257.1 (11.5) 3,066.6 3,086.4 (19.8) Agencies 2,189.0 2,111.1 78.0 2,899.3 2,844.4 55.0 Corporate Accounts (858.5) (530.3) (328.2) (1,057.8) (232.3) (825.5) Total 3,576.1 3,837.8 (261.7) 4,908.1 5,698.4 (790.3) Less Toronto Building (1.2) (11.3) 10.1 (16.1) (32.3) 16.2 Less City Planning 6.4 6.2 0.3 10.0 9.8 0.2 Total Variance-Excluding Toronto Building/City Planning 3,570.8 3,843.0 (272.1) 4,914.3 5,720.9 (806.7) % of Gross Budget -7.6% -16.4% Nine Month Year-to-Date and Projected Year-End Spending Results: As noted in Table 2 above, for the nine months ended September 30, 2023, Tax-Supported Operations experienced an unfavourable net variance of $272.1 million or (7.6%) of planned expenditures adjusted for Toronto Building and City Planning. It is important to note that the September 30th experience is a snapshot in time and the year-end projection is based on current and expected future impacts. The continued impact of COVID-19 and any deviation from expectations to year-end will impact variance projections. Any changes will be reflected in the year-end variance report. For year-end, the City is projecting an unfavourable variance of $806.7 million or (16.4%) of the 2023 Net Operating Budget, adjusted for Toronto Building and City Planning. The projected unfavourable variance results from: · $818.3 million COVID-19 funding shortfall — · $38.1 million projected unfavourable variance within Shelter Services driven by the Refugee Response funding shortfall of $103.0 million — · $49.7 million projected favourable variance across all other City Programs and Agencies. Rate-Supported Programs: Rate-Supported Programs reported a favourable year-to-date net variance of $35.5 million. At year-end, Rate-Supported Programs are projecting a favourable variance of $49.9M. Table 3: Rate-Supported Operating Variance Summary Variance ($M) Favourable / (Unfavourable) 2023 Sept YTD 2023 Year-End Projection Budget Actual Var Budget Actual Var Solid Waste Management Services (9.2) (17.9) 8.8 0.0 (13.5) 13.5 Toronto Parking Authority (19.0) (32.2) 13.2 (25.4) (37.3) 11.9 Toronto Water (22.5) (36.0) 13.6 0.0 (24.5) 24.5 Total Variance (50.6) (86.2) 35.5 (25.4) (75.4) 49.9 The favourable year-to-date variance is driven by all three programs, with expense savings in Solid Waste Management and Toronto Parking Authority, as well as favourable revenue in Toronto Water. The year-end is projecting similar drivers, with Toronto Water showing the largest favourable variance. 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 Waste Management Reserve Fund and the Wastewater and Water Stabilization Reserves respectively, to finance capital investments and ongoing capital repairs and maintenance.
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