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TO: |
Mayor and Members of Council |
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FROM: |
Andy Taylor, Commissioner of Corporate Services, Barb Cribbett, Treasurer, Joel Lustig, Director Financial & Client Services |
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PREPARED BY: |
Fuwing Wong, Manager Financial Planning |
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DATE OF MEETING: |
2005-November-21 |
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SUBJECT: |
2005 September Year-to-Date Review of Operations and Year-End Forecast |
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RECOMMENDATION:
THAT the report dated
PURPOSE:
To provide an overview
of the year-to-date financial results at the end of September 2005 and the projected
year-end financial results.
EXECUTIVE SUMMARY:
The operating results (excluding
Waterworks) at the end of September 2005 reflect a favourable variance of $3.605M. Year-to-date revenues were $3.849M favourable
and Expenditures were $0.244M unfavourable.
The following table summarizes some of
the major items that contributed to the $0.244M unfavourable variance in
Expenditures and $3.849M favourable variance in Revenues:
Further details of
all variances are available in the Discussion section of this report.
Waterworks ended September
with a $1.850M (year-to-date) favourable variance.
BACKGROUND:
On
DISCUSSION:
YEAR-TO-DATE
OPERATING BUDGET VARIANCES:
At the end
of September, the 2005 operating results (excluding Waterworks) reflect a $3.605M
favourable variance overall (see Appendix 1).
Revenues were $3.849M favourable and Expenditures $0.244M unfavourable.
SECTION 1 - REVENUES
At
the end of September 2005, revenues were favourable by $3.849M due to the
following:
Taxation
Revenues
Taxation
revenues were favourable mainly due to $1.2M favourable variance in
supplemental tax revenues, from additional supplemental billings made based on
the assessment rolls received from the Municipal Property Assessment Corporation
(MPAC). As identified in the year-end
forecast section of this report, additional assessment rolls for new/enhanced
structures on properties were received from MPAC and the year-end projection
for supplemental tax revenues has increased from $1.2M to $1.4M.
General Revenues
General
revenues were $1.832M favourable mainly due to a favourable variance in
Building Permits Fees ($1.360M), and a favourable variance in investment income
($0.497M). The favourable variance in
Building Permit revenues is due to a higher volume of building permit activity
than anticipated. Bill 124, the Building
Code Statute Law Amendment Act, 2002, came into effect
User Fees and Service Charges
The
$0.947M favourable variance is due mainly to a favourable Design and Planning
fees ($1.273M favourable) offset by unfavourable Engineering Fees ($0.276M
unfavourable), and other unfavourable revenues spread across different business
units ($0.050M unfavourable).
Other Income
Other Income is unfavourable by $0.375M, mainly due to unrealized Revenue
Strategy of $1.625M unfavourable offset by favourable winter maintenance-related
recoveries ($1.102M favourable from the Region and from developers for assumed
sub-divisions) and other favourable variances spread across various business
units ($0.148M favourable). The Winter
Maintenance recovery for unassumed sub-divisions represent a one-time revenue
“catch-up” for previous years and is projected to be approximately $0.1M to
$0.2M on an annual basis in future years.
A Revenue Strategy team is currently working on other Revenue generation
options for the Town and will present their findings to Council in 2006.
SECTION 2 – SALARY
EXPENDITURES
At the end
of September, the overall salaries and benefits variance was $0.121M unfavourable
due to the following:
The $1.855M
favourable variance in full time salaries is a result of vacant positions which
includes full-time staff away on Long-Term Disability (LTD), sick leave or
parental leave, and positions currently in the recruitment process. This favourable variance in full-time
salaries was offset by a $1.756M unfavourable variance in part-time and
contract salaries, overtime and other personnel expenditures related to business
units backfilling vacancies and leaves.
The
favourable variance in employee benefits of $0.230M is mainly due to benefit
expenses not incurred for the full-time vacancies. Further, the 2005 Budget includes $0.450M of
annual salary gapping savings target which has been fully allocated to the
individual business units.
SECTION 3 - NON-SALARY
EXPENDITURES
Non-Salary
expenditures were on budget overall at the end of September with the
unfavourable variance in winter maintenance costs offset by favourable
variances in other non-salary accounts as outlined below:
Materials & Supplies
The unfavourable
variance of $0.037M is due to minor variances spread over various business
units.
Purchased Services
The $0.430M
unfavourable variance in Purchased Services is due mainly to an unfavourable
variance of $0.343M in Roads related to Winter Maintenance snow removal
expenditures (plowing, sanding, sidewalk clearing). As outlined in the Revenue section, the
unfavourable winter maintenance variance is offset by revenue recoveries from
York Regional Transit (YRT) for snow clearing services the Town performs on
YRT’s behalf and recoveries from unassumed sub-divisions.
Other Expenditures
The
favourable variance in other expenditures of $0.275M is due to mainly to favourable
variances the Town’s Garbage Rebate Program ($0.050M favourable), deferral of recreational
expense impacts related to the Active 2010 Program Grant ($0.050M favourable)
and other variances spread across various business units in the Town.
SECTION 4 - WATERWORKS
Waterworks reported a $1.850M favourable
variance at the end of September, 2005 (refer to Appendix 2).
The favourable variance for Waterworks is
primarily due to the purchase and sale of water ($1.437M favourable). Other favourable variances include:
·
materials, supplies, &
purchased services ($0.237M favourable) due to deferral of works related to the
completion of watermain, valve and hydrants;
·
vacant positions ($0.138M favourable);
and
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revenue from sale of water
meters, water meter installation charges and water testing fees ($0.035M
favourable).
YEAR-END
FORECAST
Based on September year-to-date results,
follow-up with the Town’s various business units and additional October actual
information, the year-end surplus is projected to be $1.5M to $1.9M. As summarized below, the projected year-end
surplus is detailed further between projected revenue and expenditure variances
from operations and one time (2005) variances.
SECTION 5 – YEAR-END
REVENUE PROJECTION
Revenues are forecasted to be favourable by $2.7M
primarily due to one time revenues of $2.4M. These one time revenues consist of $1.4M in
supplemental tax revenues and $1.1M revenue related to the recovery of winter
maintenance costs from York Regional Transit and from developers for unassumed
sub-divisions. The winter maintenance
recovery for unassumed sub-divisions relates to previous years and is expected
to be approximately $0.1M to $0.2M in future years. In operational revenues, the year-end
projection is $0.3M from favourable variances in Investment income ($0.4M
favourable), Planning & Design Fees ($1.342M favourable), Parking Control
($0.2M favourable), WDO revenue ($0.2M favourable), offset by Revenue Strategy
not fully achieved ($1.625M unfavourable) and Engineering fees ($0.250M
unfavourable).
SECTION 6 –YEAR-END
EXPENDITURE PROJECTION
The projected unfavourable variance in
expenditures of $1.5M is due to a projected favourable variance in salary
expenditures of $0.8M offset by unfavourable non-salary expenditure variances
of $2.3M.
Salary Expenditures
The projected favourable variance in salary
expenditures of $0.8M is mainly due to favourable one time savings of $1.55M
offset by a projected unfavourable operational salary variance of $0.75M:
The favourable one time salary savings of $1.55M
is due to salary gapping related to the Bur Oak fire station ($0.8M favourable)
and OMERS Type III ($0.75M favourable). The
OMERS Type III variance is a one time transfer from OMERS, as a result of the
fire settlement, and will used to offset additional costs related to the
settlement (such as fire fighter long-term disability benefits). Operationally, the projected $0.75M
unfavourable variance is due mainly to year-end accounting accruals (such as
Vacation pay and Post-Retirement Benefits) partially offset by other salary
gapping savings.
Non-Salary Expenditures
The unfavourable variances in non-salary
expenditures of $2.3M is mainly due to projected unfavourable operational variances
in winter maintenance costs of $0.850M, unfavourable waste 3-Stream collection
costs of $0.275M and projected unfavourable variances in street light
maintenance $0.250M. Power Stream’s
revised charges for street light maintenance to comply with Affiliate Code, is
projected to result in an unfavourable variance by the end of 2005.
SECTION 7 – IMPACT OF BILL
124
Bill 124, the Building Code Statute Law
Amendment Act, 2002, came into effect
FINANCIAL
CONSIDERATIONS:
The Town’s forecasted surplus of $1.5M to $1.9M
at year-end is mainly due to one time revenues and one time savings in
expenditures totalling $3.95M. The Town
continues to face pressures due to growth and inflation and is taking necessary
measures to minimize shortfalls through increased efficiencies in operations
and identifying additional sources of revenue generation. The recommendations from the Revenue Strategy
task force, if approved by Council, will be a step in that direction.
Staff will continue to monitor variances for
the remainder of the year.
ATTACHMENTS:
Appendix
1 – Year-to-Date Financial Results at the end of
Appendix
2 – Year-to-Date Financial Results at the end of
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Joel Lustig, Director, Financial & Client Services |
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Barb Cribbett, Treasurer
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Andy Taylor, Commissioner of Corporate Services |
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