for this risk comes by way of the $1.5 million existing budget contingency, the Fringe Rate Stabilization reserve and the BSR.

6. Winter control costs have been generally lower than average in the last couple of years. The potential does exist for significant negative variances if a particularly severe winter season is experienced. 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 could come from the $1.5 million existing contingency and the BSR.

7. Increasing utility costs, especially for the provincial portion of the hydro bill. All utility costs are estimated at the start of the year. The likelihood of this risk materializing is rated as likely; the likely impact of the consequences is rated as moderate. Therefore, this should be considered a moderate risk. This risk is mitigated by conservation efforts and reasonable budgets. As well, further mitigation can come from the $1.5 million existing contingency and the BSR.

8. General inflationary pressures that may continue to increase as the economy continues to improve. 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 comes from increased allocations in many budget line items relative to known increased costs, as well as the $1.5 million existing contingency and the BSR.

9. Over the last several years, the program funding for Employment Services has allowed the City the ability to recover corporate overhead charges applicable to these programs. Should these provincial funding envelopes change, we would need to absorb the significant revenue reductions elsewhere by cutting services or by raising fees or taxes. The likelihood of this risk materializing in the coming year is rated as moderate to likely; the likely impact of the consequences is rated as significant. Therefore, this should be considered a moderate to significant risk. Mitigation comes from continued advocacy for the program and the $1.5 million existing contingency as well as the BSR.

Financial Matters:

Financial matters are discussed in detail throughout this report.

While Administration is recommending a modest municipal levy increase of 1.2%, in adhering to Council's direction to provide options to hold the line on taxes, reduction options to achieve a zero percent levy increase for City Department's under the control of City Administration have been presented for consideration. Should Council wish to reject any of the proposed reduction options, then additional or substitute options will need to be identified. This would hold true with respect to the addition of any service enhancements Council wishes to implement as well.

Additionally, if City Council wishes to achieve an overall zero tax increase including the Asset Management Plan and Agencies, Boards & Committees, $14,789,714 in additional savings will need to be identified to offset the increase submitted by the noted entities. As