THUNDER BAY – The city’s final 2017 surplus is double what had been projected during budget deliberations earlier this year.
The year-end financial update, which outlines last year’s tax-supported budget in the black by $5.6 million, will go before Thunder Bay city council on Monday night. The city’s finance department had projected a $2.8 million year-end surplus in January.
The positive variance is primarily attributed to $2 million in lower than anticipated police, legal and insurance costs and another $1.9 million in department savings from staff turnover, reduced overtime, increased revenue and cost containment.
There was also another $1.1 million combined from corporate energy and other corporate savings. The city also realized $600,000 through higher than forecasted corporate revenue and lower borrowing costs, though that was partially offset by higher taxation related expenses.
This marked the third consecutive tax-supported surplus, which came after the city incurred three consecutive deficits from 2012 to 2014 with a combined $11.7 million shortfall.
“Since 2012 we’ve been implementing initiatives for cost containment and deficit management. In that time period we’ve saved $12.4 million,” city financial services director Dawn Paris said on Thursday.
“It is a mindset of administration to be continually looking for ways to improve and save money where we can. Each and every year we adjust the budget accordingly to try and stabilize those areas where we think there is some risk.”
City administration is recommending the majority of those savings - $3.1 million – go into the Renew Thunder Bay reserve fund.
Setting money aside in that fund positions the city to be able to tap into anticipated provincial and federal government funding opportunities, Paris said.
“We’re expecting some announcements and some further details on funding from senior levels of government and we can access that reserve fund to be a source of revenue to fund some of those capital projects,” Paris said.
Administration is also recommending $1.1 million be used to replenish the amount council had taken from the stabilization reserve fund during the budget in anticipation of a surplus to offset a portion of the levy increase.
The remainder is proposed to be split between $900,000 for the insurance reserve fund and $500,000 for the legal fee reserve fund, two areas Paris acknowledged have proven to be volatile in the past and contributed to previous shortfalls.
“We have taken a bit of a hard hit in those areas in past years. Now there’s a favourable variance in those areas we’d like to be able to put some of that money aside to protect against future unknown costs in those areas,” Paris said.
“Those are very controllable costs and we just don’t know what can happen in the future so it’s important to have some money set aside in reserve funds for those areas.”
The city also recorded a $2.8 million rate-supported surplus, which was said to be a result of reduced service calls from a mild winter, lower energy costs, staff turnover and higher revenue. That money is proposed to be transferred into rate-supported reserve funds.
Thunder Bay had finished 2016 with a $2.7 million tax-supported surplus, though that was largely achieved as a result of capital savings approved through a deficit management strategy developed that summer to reverse a projected multi-million shortfall. The previous budget year returned a $1 million tax-supported surplus.