Risk Analysis:

While this report represents the final year-end variance for the City’s 2019 operating budget, it is important to note that there are potential risks that can have a significant impact on the year-end financial results in any particular year:

  1. The Net Tax Additions/Reductions account is extremely difficult to project with certainty. There are still some significant appeals in progress and any variances in this account will vary dramatically based on the outcomes and timing of the settlements.
  2. Current macro and micro economic conditions such as changes to local unemployment rates, volatility of energy costs, commodity prices and interest rates, as well as supply and demand for products and services.
  3. Seasonal variability with respect to revenues (e.g. Recreation Fees) and expenses (e.g. winter control).
  4. Potential increases in staffing costs due to factors such as sick call replacement, modified duties (particularly in mandated or 24/7 operational areas), WSIB, joint job evaluation or other arbitration decisions, and health benefit usage (Green
  5. Shield). Some of these costs may be covered by corporate provisions/reserves.
  6. Potential increase to unavoidable expenditures such as unavoidable repairs and maintenance, along with related purchases of materials and supplies, legal expenses, streetlight maintenance, etc.
  7. The significant use of estimates, historical knowledge and judgement in developing budgets and projecting actual expenses for the year implies that actual year-end revenues and expenditures may differ significantly from quarterly projections. One way to mitigate this risk and help to offset any unexpected or one-time variances is by way of the annual $3.5 million corporate contingency account. It is noted that this contingency amount was increased by $2M in 2019 to mitigate the uncertainties surrounding provincial budget cuts and reduced to the $1.5M level in 2020.

Financial Matters:

Refer to Appendix A for detailed descriptions to support the departmental year-end variances along with mitigating measures.

Appendix B of this report includes a list of relevant operational and economic statistics (extracted from various sources) as background information and is depicted graphically by quarter, by year, for ease of reference and comparison purposes.