THUNDER BAY – The city’s books are on track to finish the year well in the black.
Thunder Bay city administration is projecting a $3.6 million year-end surplus through the first three quarters of 2018, a figure that amounts to 1.4 per cent of the total $252.2 million net budget.
The financial update was provided at Monday night’s city council meeting, the first one since last week’s municipal election that will result in more than half of the table being turned over for the next term.
The majority of the projected surplus - $2.4 million – is generated by lower than anticipated salary costs due to retirements, staff turnover, acting assignments and staff on disability, along with lowered fringe benefit costs.
Other identified positive drivers include a $749,000 increase in provincial funding for long-term care, $634,000 in insurance claims, $212,000 in higher than expected penalties and interest on taxes.
Those include partial offsets from the Thunder Bay Police Service projected to run a nearly $294,000 deficit, as well as a nearly $170,000 shortfall in early leave costs.
City manager Norm Gale said the positive variance, and its position to the overall budget, represents appropriate budgeting.
“I’d be saying the same thing if it was a negative variance that’s being projected. It’s very tight. It’s fairly close, although the number $3.6 million does seem high,” Gale said.
“We are very tight and should there be a significant occurrence, whether it’s unfavourable weather events or whether it’s unforeseen costs in emergency services, we could be in a different position by the end of the year.”
Coun. Rebecca Johnson questioned how this year compares to 2017, when a similar third-quarter projection ended up doubling over the final months of the year to result in a $5.6 million surplus.
“That’s a significant amount of money,” Johnson said, asking whether it’s anticipated the same thing could happen again.
Gale responded that the city has different internal reporting procedures and the amount that is projected is the best estimate.
Based on the projected financial performance, administration is recommending $2.9 million be directed to the stabilization reserve fund, $634,000 to the insurance reserve fund and $77,000 to the legal fees reserve fund.
The next term of council will decide in 2019 how to allocate any surplus funds.
Council earlier this year voted to dedicate last year’s positive variance into reserve funds.
“Citizens that are benefitting from us putting funds into a stabilization reserve fund, they may not see it initially but by having funds available in our stabilization reserve fund it will reduce costs down the road,” city treasurer Linda Evans said.
“It will reduce the amounts we need to debenture when council makes decisions on infrastructure financing and we would be able to go to reserve funds to assist with reducing costs. That’s one example. Of course, having funds available to leverage provincial and federal infrastructure funds that we’re hoping will be announced in the new year as well.”