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HomeMy WebLinkAboutFIN-2021-64 - September 2021 Variance ReportStaff Report Financial Services Department REPORT TO: Finance and Corporate Services Committee DATE OF MEETING: December 6, 2021 SUBMITTED BY: Ryan Hagey, Director of Financial Planning & Reporting PREPARED BY: Debbie Andrade, Manager of Budgets WARD(S) INVOLVED: All Wards DATE OF REPORT: November 16, 2021 REPORT NO.: FIN -2021-64 SUBJECT: September 2021 Variance Report RECOMMENDATION: For information. REPORT HIGHLIGHTS: wwwkitchener. ca • The purpose of this report is to provide an update on financial results for City operations. • Tax supported operations are projecting a deficit of $7.4M, largely due to COVID-19. This size of deficit is to be expected based on the ongoing nature of the pandemic. • The City is well positioned to cover any deficits due to COVID-19 by funding provided by the Federal and Provincial governments in 2020 and 2021. • This report supports the delivery of core services. BACKGROUND: This is the second variance report to Council regarding the City's financial performance versus the 2021 budget. The report and attached schedules include information regarding: • Tax supported operations • Rate supported enterprises/utilities, and • Supplementary information related to investment income REPORT: Overall staff is projecting the City's tax supported results for 2021 will be a deficit of $7.4M (3.6% of expenditures totaling $207.8M), or the equivalent of just over a 5.0% property tax rate increase if there was no balance in the appropriate stabilization reserve. The major contributors to the overall negative variance are the projected deficits in Sport recreation revenues, Emergency Operations Centre, and Investment Income. As COVID-19 related restrictions carried into 2021 causing facility closures and reduced programming these areas continued to be greatly impacted for the first half of 2021 with considerable losses in income for recreational programs (e.g. pools, arenas, sportsfields, and community centres). These deficits are offset in part by Gapping savings resulting from COVID-19, as well as, regular *** This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994 for assistance. Page 44 of 61 vacancies. More details about each of the City's tax supported divisions are provided in the report below and in Schedule 1. The City's enterprise (non -tax supported business lines) results to the end of September show most of the enterprises have results that were better than budgeted. However, in the rate supported operations, Parking was hit hardest by COVID-19 with lower than anticipated revenues due to the ongoing restrictions causing downtown businesses to close and/or run at reduced capacity resulting in less vehicle traffic requiring monthly or hourly parking in the downtown core. More details about each of the City's enterprises are provided in the report below and in Schedules 2-8. The City has a total of $6,534,000 in Safe Restart Funding of which $4,022,000 was carried over from 2020 and $2,512,000 was received in 2021. In addition to this funding, the City received $4.8M in COVID-19 Recovery Funding from the Provincial government as part of their COVID-19 relief plan announced on March 4, 2021 to support Ontario municipalities in dealing with the ongoing impacts of the pandemic. The total Safe Restart and COVID-19 Recovery Funding of $11.3M will be sufficient to fund the City's projected deficit of $7.4M in tax supported operating, as well as year-to-date deficits in the Parking enterprise of $1.1 M and the Golf enterprise of $14k. Any carryover funding will help the City deal with any continuing negative financial impacts of COVID-19 that extend into 2022. Operating Fund — Tax Base (Schedule 1) Staff is projecting the City's tax supported results for 2021 will be a deficit of $7.4M (3.5% of expenditures totaling $207.8M), or the equivalent of just over a 5.0% property tax rate increase if there was no balance in the appropriate stabilization reserve. Significant projected tax supported variances (over $200,000) are summarized below. Additional details are provided in Schedule 1 for projected variances that exceed $100,000. Significant Proiected Variances (over $200, 000) Community Services Department: • Bylaw Enforcement is projecting a deficit of $735,000 in fine revenues, as the City has not been issuing as many tickets due to the COVID-19 restrictions in place for the first half of the year. Additionally, the collection of defaulted fine amounts is not back to pre -pandemic levels as the Ministry of Transportation has not been enforcing license plate renewals, which would ensure outstanding fines are paid. • Sport is projecting a deficit of $6,420,000 due to reduced revenues as programs and rentals are negatively impacted due to COVID-19 restrictions. This projection is slightly better than first reported in the June variance report as COVID-19 restrictions have lessened in the second half of the year. Corporate Services Department: • Legislated Services is projecting a deficit of $215,000 due to lower than anticipated licensing revenues as a result of COVID-19 Page 45 of 61 Development Services Department: • Economic Development is projecting a deficit of $215,000 due to lower than anticipated Market and special event room rental revenues as a result of COVID- 19. • Planning is projecting a surplus of $325,000 due to higher than anticipated revenues for site plans. Engineering is projecting a surplus of $590,000 as a result of increased revenues from site plans, service charges and recoverable external billings. Infrastructure Services Department: Facilities Management is projecting a surplus of $1,330,000 due to reduced utility costs compared to budget, as some City facilities remain closed and/or operating at reduced capacity due to COVID-19 restrictions. • Parks and Cemeteries is projecting a $275,000 deficit due to a loss in revenues at Williamsburg Crematorium, unbudgeted playground repairs and forestry cleanup requirements. General Expense: • Gapping is projecting a surplus of $2,330,000 due to staff savings related to regular vacancies and COVID-19, as a number of staff whose facilities or programs were suspended during the pandemic were put on designated emergency leave (DEL) or infectious disease emergency leave (IDEL) allowing them to take advantage of various income support programs offered by the Federal government such as the Canada Emergency Response Benefit (CERB). Emergency Operations Centre is projecting a deficit of $2,500,000 due to the COVID-19 pandemic. Example of costs include: o Purchases of personal protective equipment and other health & safety supplies o Staff costs related to managing the City's COVID-19 response o Additional cleaning and minor retrofits of City facilities General Revenues: • Supplementary Taxes/Write-Offs is projecting a deficit of $800,000 due to increased write-offs from assessment appeals. Investment income is projecting a deficit of $1,670,000 due to Bank of Canada emergency rate cuts in March 2020, which is lower than the budgeted rate based off a 3 -year average. Penalties & Interest is projecting a $640,000 surplus due to an increase is property taxes receivable. Enterprises — (Schedules 2 to 8) For the period of January to September, total enterprise results are $6.OM better than budget, with four of the City's seven enterprises in a year-to-date surplus position. Details of each enterprise are noted below. Page 46 of 61 Building Enterprise (Schedule 2) $(117) , ($1,347) $1,230 The Building Enterprise has a favourable variance of $1,230,000 as a result of higher than budgeted permit revenues and lower than budgeted expenses due to staff vacancies. Golf Enterprise (Schedule 3) $49 The Golf Enterprise has a slight unfavourable variance of $14,000 primarily due to higher than budgeted expenses. Parking Enterprise (Schedule 4) NetResults ($000's) Favourable/(Unfavourablewdget Variance • MIN The Parking Enterprise has an unfavourable variance of $1,088,000 as revenues are significantly lower than budget due to reduced monthly and hourly parking demands related to COVID-19. Water Utility (Schedule 5) Water $1,432 $345 $1,088 The Water Utility has a favourable variance of $1,088,000 primarily due to higher than budgeted volume of water sales as a result of the dry spring. Sanitary Sewer Utility (Schedule 6) Sanitary Sewer $5,233 ($1,076) $4,157 Page 47 of 61 The Sanitary Sewer Utility has a favourable variance of $4,157,000. Sewer surcharge revenues are higher than budgeted, which is consistent with increased volume sales noted in the Water utility. In addition, sewage processing costs were less than budget due to the dry spring. These favourable variances are slightly offset with unbudgeted standby costs and vehicle rentals as a result of COVID-19. Stormwater Utility (Schedule 7) aiormwaier -1)aLL �nnz k�,+u) The Stormwater Utility has an unfavourable variance of $40,000. Much of this is related to increased administration expenses due to additional development review costs and unanticipated standby costs and vehicle rentals incurred as a result of COVID-19. The negative variance is mostly offset by reduced maintenance costs due to a delay in a contract renewal. Gas Utility (Schedule 8) Gas Utility (Total) $(1,776) _ $(2,422) _ $647 Gas Delivery $(1,3544 $ 1( 327)J ($26) Gas Supply J ($422) ($1,095) $673 The Gas Utility (Total) has a favourable variance of $647,000. The majority of this variance is due to lower than anticipated Gas Supply expenses as lower volumes of gas were purchased due to the warmer than normal winter. Gas Delivery has an unfavourable variance due to lower than anticipated revenues which are partially offset by savings in expenses due to staff vacancies and increased program revenues in tank rentals and recoveries from warranty items. Investment Report (Schedule 9) All investments made were in accordance with the City's investment policy. Short-term investment yields to date have averaged 1.05%, and are well below the average interest rate of 1.64% for all of 2020. STRATEGIC PLAN ALIGNMENT: This report supports the delivery of core services. FINANCIAL IMPLICATIONS: Financial implications are discussed above and detailed in the attached schedules. COMMUNITY ENGAGEMENT: INFORM — This report has been posted to the City's website with the agenda in advance of the council / committee meeting. Page 48 of 61 PREVIOUS REPORTS/AUTHORITIES: There are no previous reports/authorities related to this matter. APPROVED BY: Jonathan Lautenbach, Chief Financial Officer ATTACHMENTS: • Schedule 1: Statement of Operations — Tax Supported Services • Schedule 2: Statement of Operations — Building • Schedule 3: Statement of Operations — Golf • Schedule 4: Statement of Operations — Parking • Schedule 5: Statement of Operations — Water • Schedule 6: Statement of Operations — Sanitary Sewer • Schedule 7: Statement of Operations — Stormwater • Schedule 8: Statement of Operations — Gas • Schedule 9: Investment Report Page 49 of 61 a a a a a a a ti a of v vt - 'o a V m v 'o H a v v p W a m m a o n In a m v a m ry m ry ai In ry a � � N d' VI W a v w ry 'i m Lc o m m ti 2 ri m m ti Y p u 1 m m y w " p a � t O s � O� � u u z d i {~/7 yWj> w z V uV E u 0 uV 0 w Y� d rao ^ O O V z ZFZ 7 z z wz uD z z f W o Q a w U 32 a O 2 z O O O O O O O O O O O O O O U O O O O O O O O O O O O O O O O O O O O O O O O O O O O w ryto v > O to O O N O to O to O I+1 I+1 W z W H w o z Z_ z a Z H z 0 p a0 a Z p a z g w 0 O Z z d 0 z w a w w a K w> O z 3 0 0 n n W a m ti In m m n oo a m a ry m a n m ti m ,fl N rvt 01m � � ry n � m t0 N '-i i0 ry to N 1p N I� W n 01 N W N i0 i0 01 1p rvt DJ � m_ m ,n R c m m m In a a a a a of O of 01 vt - 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o n Q E 7 N O U a N a U c 0 a-+ a 7 7 N O a n � 0 ?� m a Q1 � L a-+ .3 N O a O N 00 N � O M OU cn N_ L U_ s= � 3 U a s: a a 6 'i � a s� Y a 3 v o � p ya s= 3 ai W Z i >a ai W O N LJ Q oai cc a' Q a U Z C: a a W = i Qm LU i v� Non U Ol J � aaj � 3 Q Z Ln L~jl � � iF a• -I 4- 0 m LO a U 7 0D .� a W z C W c N ap Z LU ami Z = U + � O Ll c`"c a X ai o a ami U `° 2 Lu LO a a a- N+ a Q p o Z - o a * LU c O + a f0 s, U Q LU a V) o Z> a a o o a J W L v a a Z a O Wdi O 6 O 0p W ?>t'JiL to OL LJ L W E i OU 3: C uj Ln U G O LX Q N Ln m ci c -I n C r! o n Q E 7 N O U a N a U c 0 a-+ a 7 7 N O a n � 0 ?� m a Q1 � L a-+ .3 N O a O N 00 N � O M OU cn N_ L U_ s= � 3 U a s: a a 6 'i � a s� Y a 3 v o � p ya s= 3 ai W Z i >a ai W O N LJ Q oai cc a' Q a U Z C: a a W = i Qm LU i v� Non U Ol J � aaj � 3 Q Z Ln L~jl � � iF a• -I 4- 0 m LO Ti 0 z LL W > W (A W z 0 a N m H 0 M 4- 0 ti LO a) I� O t\ Ict O r, N -A -1 111 t i 000 -j 1 (D O M Lr O Lr 00 O O Q H M N M (D � I D lD -A O M O M M M M N� M N U 111 111 !n Q b0 U O O cu G +� r1 N M z �+ N 01 111 ct O N M O lD (D Ol O )E (D r� 0) L C ul - L (D (D O U W 111 .--I M w rl 111 of M of 111 M o U -A m M 111 00 M N I� N I'D O 111 (D -A N 0) N 3 I� � V) •C Q 3 N N M -A u N W L W E L i L� C > o a 0 0 a LU (n 0 a (n u (n 0 � 1x O M M N 0) Ln m rr Lr 000 (D M I 00-t N 14 O W C7 � m O (D Ln ul 111 �o 00 I'D 00 (D 111 rlj Ln N 111 (D �t O m c -I c -I c -I c -I N (D rlj 0) (D N —A 00 M 000 O 00 M --I M 00 00 --I N (D —1 -i� M 0�00 j OO qczl to O 0) —A 01 N —A Itt 00 M —1 00 N U (D (D N (D Q Ti 0 z LL W > W (A W z 0 a N m H 0 M 4- 0 ti LO a) sz t i O E O !n b0 U O O +� d U- C �+ N aL31a`oa L LL 7 O U c0 L C L !n L - U 0) N w u o 3 o W W N �O L 3 V) •C (n 3 N u N W L W E L i L� C > o a 0 0 LU (n 0 a (n u (n 0 � 1x Ti 0 z LL W > W (A W z 0 a N m H 0 M 4- 0 ti LO a) 00 v v U N Lr) c I lD N m 00 Lr) O r- N D1 N lD lD N N c -I c -I -1 N -A � oc r\ fV 00 N fD M N � o It* 00 N Lr N fD -A 00 00 N N -A Lr) G1 tD O D1 r- rn rn n Lr) r, fV N -A 0 lD lD lD Lr) N Lri c -I c -I fV 0 N Lli -1 0 Ln O N � v Z fL Lr) M N ni Lri z 00 CY) a , lD ` 0 00 Lli M -* Lr) 00 00 -A m 00 00 oc 00 c -I O n fb M N Lli 00 Lli M O m N n Lli Lr) Lr) O rn 00 00 Lli M W 00 00 ri t\ ' O G G) O 00 00 r- 00 Lli � O I fs r\ rn O W -A O ,:I- lD ry m Ict (3) 00 -A 00 Z m ' lD N 0 0`00 M fD lD m 01 N O � O � c -I c -I � N Lr) 00 G m fD N O � O � c -I c -I O N � v Z fL lyi O1 O z Om0 a , + 0 N s -I M 00 L11 lD , Lr cA r� a i lD lD 00 Lr) o N I� Lf) I N Lf) n E0. ; L Q m lD ` rn Ln Q O O a fT I'D Lr) 00 00 -A m 00 00 oc 00 c -I O n fb M N Lli 00 Lli M O m N n Lli Lr) Lr) O rn 00 00 Lli M W 00 00 ri t\ ' O G G) O 00 00 r- 00 Lli � O I fs r\ rn O W -A O ,:I- lD ry m Ict (3) 00 -A 00 Z m ' lD N 0 0`00 M fD lD m 01 N O � O � c -I c -I � N Lr) 00 G m fD N O � O � c -I c -I N � v Z fL u c s z a , + Q F- u � s a i i U0 U w Y O a E0. ; L Q J ` z O Q a a O OA jcj N O L=L O LL, N 4J � C N S2 > -a > a N oa) NO f- w xLLI L N 0 0 z 0� _ w 0 Lr) 00 00 -A m 00 00 oc 00 c -I O n fb M N Lli 00 Lli M O m N n Lli Lr) Lr) O rn 00 00 Lli M W 00 00 ri t\ ' O G G) O 00 00 r- 00 Lli � O I fs r\ rn O W -A O ,:I- lD ry m Ict (3) 00 -A 00 Z m ' lD N 0 0`00 M fD lD m 01 N O � O � c -I c -I � N Lr) 00 G m fD N O � O � c -I c -I Q1 00 N l0 Ln M N O Ln M lC N 00 M N M r -I 00 N ri LM M V-1 i N � v Z u c s a , � s a i i U0 U Y O L Q J ` z O s_ a � 3 i fL L=L S C Z W > Q a s m NO f- N N w z U _ w 0) a a f o A ° > > C Q c c a -" Q WLLI f fY LL >O O CO >_ a U H z C] Q1 00 N l0 Ln M N O Ln M lC N 00 M N M r -I 00 N ri LM M V-1 i 4- 0 co LO Q Q N � v Z u c s a , � s a ` z a L=L S Z W > Q a s m ♦yLLI w z u = 0) a a f Z c a -" Q WLLI f m a N tLo U v C m a v CL Z 0 > Li 4- 0 co LO Q Q Of v U N Lr) r� M 01 iD M lD c -I c -I c -I Q N M dl dl H U a o Ln tD z 0 00 O Itt dE M N W U O1 lD z X11 N a a H W C7 m � N m � M N Ice (3� N -A .A N O ri N N O O O N M G) m m A -A LA z O a O' W M > O fl N Jfl. c c 3 > QJ a C) a d = w vii (7 Pfl o -I O p M al c -I M 4- 0 rn LO cy C u t c � a s jr s N + zLLI a W H � � LLI rho u 0) O z O Q N J m u o z Q a W LLI '� u i a r S s O Ln Ln C7 N d 0 b4 CL O U z a > QJ JQ r Z * u 4- 0 rn LO N N ca cpa im COD 1� O C/3 CQ i O COD a ca * I ass CD TIM CNCNb 1 U 0 CD PM i rii U Lo o CZ I �' CO3 O N �I �y cc Q c m 'bGG a� ca = + 9� CIQ bab o Qi c + 26 ^ v Ncc U rz c 0 0 0 0 O� N 0 0 0 OLq b I CA O � N O c� 2 � 0 O 0 O 0 O 0 O 0 O 0 O 0 O 0 O O U O O O u1 O O O u1 O O O u1 O O O u1 ca * I ass CD TIM CNCNb 1 U CD ca * I ass CD TIM CNCNb U CD PM E U Lo CZ I �' CO3 O v �y �i Q + 9� CIQ Qi c + 26 ^ v c 0 0 0 0 O� N 0 0 0 OLq O � N O rm O N O cpaO im O O COD O C/3 CQ i O Q. 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