City's 2nd quarter variance projects $2M surplus

THUNDER BAY – The city’s books are on pace to be in the black for the third straight year.

The second quarter variance report was presented to Thunder Bay city council on Monday night, which projects a $2 million tax-supported surplus. That amounts to 0.8 per cent of the approved $252.2 million net budget.

The majority of that forecasted positive variance - $1.2 million – is a result of vacancy savings due to retirements, staff turnover, acting assignments and time when positions haven’t been filled before new hiring.

The notion of jobs going unfilled did not sit well with Coun. Andrew Foulds, who wanted to know how many positions were left open.

“I am concerned about the length of time and our ability to maintain the level of service that this council decided with the last budget. I want to be assured that the level of service continues because if we have long-term vacancies, those are persons who do work. Those are persons that deliver services,” Foulds said.

City treasurer Linda Evans said the surplus did not necessarily mean a high number of jobs were being left open, using the example of savings when employees retire and are replaced with new hires.

“The individuals that are coming are being paid at a lower salary band as they enter. That also accounts for a significant dollar value,” Evans said. “I know in corporate services and long-term care – and I’m sure throughout the departments – we aim to fill the positions as quickly as possible, particularly when any service is being impacted.”

Last year the city finished with a tax-supported surplus of $5.6 million, doubling the amount that had been projected at the end of the third quarter. In 2016 there was a $2.7 million positive variance, though that came as a result of a deficit management strategy implemented halfway through that year that resulted in capital savings to overcome a projected multi-million dollar shortfall.

Coun. Trevor Giertuga had unsuccessfully pushed for the 2017 surplus money to be used to offset future levy increases and asked administration whether consideration would be given to doing that if the positive variance is realized.

“We tell the constituents we want this much money, we need this much money to provide the services for the year,” Giertuga said.

“I know we have built up our reserves to a certain degree and we need some reserves but at some point, I think we should be giving that money back to residents. If we don’t utilize it to provide the services we promised, I think we’re collecting it under false pretenses.”

Coun. Frank Pullia, the city’s budget chair, reminded council that the figures presented on Monday are not guaranteed.

“These are projections. We’re still in the second quarter of the year,” Pullia said. “They may or may not materialize. We may have a bad winter and could wipe out any potential savings.

Administration is projecting a negative variance of $132,000 for its rate supported operations, with a small favourable variance in waterworks offset by a $259,000 wastewater shortfall attributed to lower than expected revenues.