going forward. Administration will continue to monitor changes in the provincial budget, related legislation and regulations, and will consider such impacts going forward. Any surplus from the increased 2019 budget contingency related to provincial budget cuts will be recommended as a transfer to an appropriate reserve at year-end to assist in offsetting, to some degree, the potential effects of future changes to provincial grant revenues. It is important to note that this amount may not be sufficient to fully offset the cost impacts and that future budgets may require additional funding to address this matter.

2. Tax Appeals is a difficult account to budget accurately as it is impossible to predict which taxpayers will appeal assessments and the eventual outcome of those appeals. Multimillion dollar swings are not unusual in these matters. The likelihood of this risk materializing is likely or almost certain; the likely impact of the consequences is moderate. Therefore, this should be considered a significant risk. To mitigate this risk, the City has set up a dedicated reserve fund (current balance of $10.6 million), which is currently replenished each year by inflows of approximately $4 million. Additional mitigation could come from the $1.5 million existing contingency provision within the annual operating budget or the Budget Stabilization Reserve (BSR).

3. Negotiations leading to new wage settlements across various collective bargaining groups, with some wage settlements well above the rate of inflation being awarded by arbitrators to the public safety groups (Police, Fire & Ambulance), will have a significant impact on the municipal budget. This is especially important as public safety services account for the largest share of the property tax levy. The likelihood of this risk materializing is rated as likely to almost certain; the likely impact of the consequences is rated as high. Therefore, this should be considered a significant risk. Mitigation for this risk can come from successful collective bargaining. Additional mitigation is provided by reasonable provisions included in the recommended budget for this line item as well as the BSR. Continued advocacy for an improvement to the arbitration process is also an additional longer-term mitigation strategy.

4. Fuel related costs have been extremely volatile over the last several years. While average fuel prices increased slightly in 2019, they have started to come back down in recent months. There remains the risk that prices could spike again in 2020. An increase in fuel prices has been reflected in the 2020 budget. Furthermore, there is always the risk that global crisis may increase fuel costs in the future. The likelihood of this risk materializing is rated as possible; the likely impact of the consequences is rated as moderate. Therefore, this should be considered a moderate risk. Mitigation for this risk comes from the BSR and the $1.5 million existing contingency provision in the operating budget.

5. Pension funding is another risk area. Over the last several years, the global market has largely recovered from the collapse that negatively impacted the value of assets contained in the pension funds. Any future market correction may put additional pressure in the value of these pension funds, causing an increased contribution requirement from the corporation or special funding contributions. The likelihood of this risk materializing is rated as possible; the likely impact of the consequences is rated as moderate. Therefore this should be considered a moderate risk. Mitigation