1.     2009 Corporate tax Supported status report – q2


Rapport d’étape sur les services municipaux financés par les recettes fiscales 2009 – T2






That Council:


1.      Receive this report for information; and


2.      Establish the debt authority for the specific Infrastructure and Recreational projects as outlined in Document 5.



RecommandationS du Comité


Que le Conseil:


1.      reçoivecevoir le présent rapport à titre d’information; et


2.      établisser l'autorisation d'emprunt pour les projets récréatifs et d'infrastructure spécifiques tel que décrit dans le document 5.






1.      City Treasurer’s report dated 8 September 2009 (ACS2009-CMR-FIN-0040)


Report to/Rapport au :


Audit, Budget and Finance Committee

Comité de la vérification, du budget et des finances


and Council / et au Conseil


8 September 2009 / le 8 septembre 2009


Submitted by/Soumis par : Marian Simulik, City Treasurer/Trésorière municipale


Contact Person/Personne ressource:Mona Monkman, Deputy City Treasurer – Corporate Finance/ Trésorière municipale adjoint – Contrôleur Finance

Finance Department/Service des Finances

(613) 580-2424 x41723, Mona.Monkman@ottawa.ca


City Wide/à l'échelle de la Ville

Ref N°: ACS2009-CMR-FIN-0040




2009 Corporate tax Supported status report – q2




Rapport d’étape sur les services municipaux financés par les recettes fiscales 2009 – T2





That the Audit, Budget and Finance Committee recommend Council:


1.            Receive this report for information; and


2.                  Establish the debt authority for the specific Infrastructure and Recreational projects as outlined in Document 5.





Que le Comité de la vérification, du budget et des finances recommande au Conseil:


1.                  de recevoir le présent rapport à titre d’information; et


2.                   d'établir l'autorisation d'emprunt pour les projets récréatifs et d'infrastructure spécifiques tel que décrit dans le document 5.




Since 2004, staff has been preparing “Quarterly Operating Status” reports on a corporate basis.  These reports have been presented to Corporate Services and Economic Development Committee for information and then to Council.  At the August 28, 2008 Council meeting, the following motion was carried:


MOTION NO. 41/33


Moved by Councillor D. Deans

Seconded by Councillor R. Jellett


BE IT RESOLVED THAT the Standing Committees of Council be provided with status reports to review the actual operating and capital results of their respective departments on a quarterly basis during 2009 and subsequent years.


In accordance with this motion, the second quarter status reports have been provided to each Standing Committee of Council for their respective departments. 


This corporate status report summarizes the information contained in those reports in a corporate format. The Operating Status at June 30th and forecast to year-end are for the Tax Supported Budget only.  These exclude the operations of the Ottawa Police Services Board and Ottawa Public Library Board, since they report directly to Council.  A budget status report for the Rate budget was presented to the Planning and Environment Committee on September 8, 2009.  


Document 1 to this report shows the actual revenues and expenditures compared to the same period budget for the 6-month period ending June 30, 2009.  Document 2 shows the forecast position to year-end based on the results to date and an analysis of conditions that will continue to year-end. 





June 30th results and 2009 Forecast (Documents 1 and 2)


Tax supported programs are in a $6.4 million deficit position at June 30, as shown in Document 1.  Document 2 shows that at this time, based on results to date, the forecast is an $11.8 million deficit at year-end.


The present forecast anticipates that the City will be successful in its efforts to mitigate the effect of the loss of Payments In Lieu of Taxation that results when Federal Government properties are sold. The City of Ottawa is petitioning the Minister of Finance to restore this long-standing revenue source to the municipality, as losses already total $9 million to date and the potential loss to Ottawa taxpayers is $25 million annually.  In terms of the impact on the 2009 position, if the City is unsuccessful, this will cause an additional $4 to $6 million deficit in the accounts this year.


The non-departmental section of the budget contains two revenue items that could result in significant changes to the forecast position.  First, we have insufficient information at this time to project if the budget for supplementary taxes will be met or exceeded.  Second, there is a $2 million budget for a Federal Grant for Police Services that is outstanding.


The forecast shortfall in tax supported programs results from three pressure points.



Labour Contract Settlements in Excess of Budgets


Cost of living adjustment settlements were at 2.5%.  The budget was set a 1%, causing a corporate budget deficiency of $7 million. 


Under Achievement in Efficiency Savings

At this time, it is estimated that $11.6 million in achieving departmental productivity targets and management efficiency targets is delayed.  These issues will be detailed in a separate report for Committee and Council. 


Pressures Caused by the Current Economic Situation
Budget pressures caused by the current economic situation total approximately $7 million.


These include:

·        Investment Income and Credit Card Fees - $4.7 M


Income earned on investments has declined in this low interest environment.  Budgets were based on historical earnings levels.  In 2008 the returns on our portfolio averaged 3.67%.  This year they are forecast to average 2.04%.  Low short-term interest rates are expected to continue into 2010.  Solid Waste Services reduced fees is due to lower ICI volumes and poor recycling markets.

Additional Revenues and Lower Costs that Offset These Pressures
Additional revenues and reduced expenditures of approximately $10 million are offsetting the pressure points noted above. 


These include:
·         Hydro Dividend in excess of amount budgeted - $3.2 M


Proposed Action Plan to Deal with the Present Financial Situation and Forecast


Management will be reviewing their operations to determine how the forecast deficits may be mitigated through deferred hiring plan, purchases and program curtailments.


In the event that there is a deficit at year-end in the tax supported budget, it can be funded from balances in the Corporate Fleet Reserve.  This reserve is forecast to have a balance of $17 million at year-end.  Any use of this reserve to fund a general operating deficit can be repaid to the reserve over 5 years with interest.  An annual repayment would be made to the Vehicle and Equipment reserve fund by directing a portion of the annual pay-as-you-go contribution to the City Wide capital reserve fund.  There would be no new budget pressure on the tax rate as a result of this funding plan.


Departmental Programs:


At June 30th, Public Works had a $2 million deficit, primarily due to winter maintenance costs, and is forecasting to improve the situation to a $0.7 million deficit at year-end.  Planning and Growth Management and Solid Waste Services are also in deficit positions at mid-year and are forecasting year-end deficits. Social Services is in a $3.7 million surplus position at June 30th, offsetting other departmental deficits, with a year-end forecast surplus position of $1.9 million.  Emergency and Protective Services is at break even at mid-year and is forecasting a $2.3 million deficit at year-end, primarily as a result of delayed savings in productivity targets.


Compensation (Document 3)


Document 3 provides compensation information showing the actual salary / benefits and overtime costs incurred by department / branch to June 30th versus the full year budget.  Overtime expenditures are ahead of budget, primarily for the transit area, as a result of accelerated return to service.  These additional transit costs are projected to be offset by savings in fuel, plant maintenance, Para Transpo costs and transit revenues.


Reserve Fund Balances (Document 4)


Document 4 provides projected year-end balances for the various City capital and operating reserves. 


Debt Authority for Specific Infrastructure Projects (Document 5)


On June 5, 2008, the Federal and Ontario governments provided the City with a list of approved infrastructure stimulus projects.  Similarly, on June 26, 2008, the City was provided with an approved list of recreational stimulus projects. The staff reports "Financing of the City Portion of Infrastructure Stimulus Projects" and "Financing the City Portion of Recreational Infrastructure Projects" were approved by Council on June 24 and July 8 respectively.  These reports established $58.7 million in debt financing to fund a portion of these projects.  Since that approval, specific project numbers have been established in the City's financial system and the debt financing has been assigned to each approved project.  The staff recommendation as contained in this report is of an administrative nature to ensure that Council has authorized the debt for each specific project. 










There are no legal or risk management impediments to implementing the recommendations in this report.





The financial implications are detailed within the report.



SUPPORTING DOCUMENTATION (all documents immediately follow the report)


Document 1 – Tax Supported Operating Budget Status as of June 30, 2009

Document 2 – 2009 Tax Supported Operating Budget Forecast to Year-End

Document 3 – 2009 Compensation Report

Document 4 – Reserve Fund Status

Document 5 – 2009 Infrastructure Stimulus Projects Debt Funding





Financial Services will make the necessary adjustments to reflect the decisions of Committee and Council.