8. 2011 Operating and Capital Budget q2 – Finance and Economic Development committee status report

Budgets de fonctionnement et des immobilisations 2011 – T2 - Rapport d’étape DU Comité des finances et du développement économique

COMMITTEE RECOMMENDATION

That Council approve the capital budget adjustments as outlined in Document 6. 

RECOMMANDATION DU COMITÉ

Que le Conseil approuve les ajustements budgétaires décrits dans le document 6.

DOCUMENTATION

1. City Treasurer’s report dated 10 August 2011 (ACS2011-CMR-FIN-0044).

Report to/Rapport au :

Finance and Economic Development Committee

Comité des finances et du développement économique

and Council / et au Conseil

10 August 2011 / le 10 août 2011

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

Contact Person/Personne-ressource: Tom Fedec, Manager Budget and Financial Planning, Finance / Gestionnaire, Planification budgétaire et financière, Finances

613-580-2424 ext./poste 21316, Tom.Fedec@ottawa.ca

City wide / À l’échelle de la Ville

Ref N°: ACS2011-CMR-FIN-0044

SUBJECT:

2011 Operating and Capital Budget q2 – Finance and Economic Development committee status report

OBJET :

Budgets de fonctionnement et des immobilisations 2011 – T2 - Rapport d’étape DU Comité des finances et du développement économique

REPORT RECOMMENDATIONS

That the Finance and Economic Development Committee:

a) receive this report for information; and

b) recommend that Council approve the capital budget adjustments as outlined in Document 6.  

RecommandationS du rapport

Que le Comité des finances et du développement économique :

a)  prenne connaissance de ce rapport; et

b) recommande au Conseil d’approuver les ajustements budgétaires décrits dans le document 6.

BACKGROUND

Quarterly operating and capital status reports are prepared as part of the reporting framework approved by Council.  Operating reports present actual year-to-date revenues and expenditures against the amounts previously budgeted for the corresponding period.  This status report along with the next Q3 report, also presents a year-end forecast.  Capital reports provide a listing of the capital projects / programs, the authorized expenditure budgets, along with the actual expenditures and commitments incurred to date.

The purpose of this report is to present by Standing Committee the second quarter operating and capital results for City Wide Tax Supported Programs along with providing a forecast to year-end.  All Departments / Branches were asked to review their second quarter results to ensure that their respective spending and revenue results were not indicative of any underlying issues needing to be highlighted or addressed at this time.  Additional information on specific program areas is provided in this report where a significant variance from budget has occurred.

Compensation information, showing the actual salary / benefit and the overtime costs incurred by department and branch for Q2 versus the full year budget, is also presented in this report.  

Second quarter results and year-end forecasts for Transit operations, Water / Sewer operations, Public Health and Library services will be presented in separate reports to their respective Boards / Commissions.

DISCUSSION

Document 1 provides operating budget detail on year-to-date results and projected year-end results for the various Departments / Branches reporting to the City’s Standing Committees. 

Document 2 provides detailed listing of the capital projects of the below noted Departments / Branches sorted by category namely, Renewal, Growth and Strategic Initiatives.

Based on the results to June 30, staff is anticipating that the City will be in a surplus position at year-end for its tax supported programs of approximately $2.391 million represents 0.15 percent of the budgeted $1.596 billion in municipal spending. 

Table 1 – Summary of 2^nd Quarter 2011 Results and Forecast to Year end

2011 2nd Quarter Status Report	Annual Expenditure Budget	Annual Net Budget	YTD Net Surplus / (Deficit)	Forecast Surplus / (Deficit)
	$000	$000	$000	$000
Agriculture & Rural Affairs Committee	3,301	3,301	33	(70)
Community & Protective Services Committee	952,576	496,179	351	(2,142)
Environment Committee (Tax)	89,894	44,078	3,139	2,619
Finance & Economic Development Committee
Departmental Operations	165,488	149,216	743	797
Non Departmental Accounts	196,900	(1,329,944)	1,884	2,932
Total FEDCo	362,388	(1,180,728)	2,627	3,729
Planning Committee	34,160	(3,414)	(469)	(1,085)
Transportation Committee	153,790	135,207	(94)	(660)
Total Tax Supported Programs	1,596,109	(505,377)	5,587	2,391

Finance & Economic Development Committee (FEDCo)

Elected Officials - The administrative support budget is expected to be under spent by $0.5 million.

Financial Services - Increased revenues from higher Municipal Tax Sales and collection handling fees are expected to result in a year-end surplus of $0.4 million.

City Clerk & Solicitor - although a small deficit for 2011 is projected, the year-to-date and forecast projections for Legal Services includes funds from the Ottawa Lynx Litigation settlement which is subject to Council approval of the recommendations in the report “Comprehensive Legal Services Report – January to June 2011.”

Non-Departmental

The projected year-end surplus of $3.4 million in the “Capital Formation” accounts is due primarily to the sale of surplus properties.  Surplus land sales are not budgeted for on an annual basis since the land available for sale will vary significantly from year-to-year.

Higher projected revenues of $2.0 million from increased Hydro Ottawa dividends and Penalty and Interest (Corporate Common Revenues) is expected to be offset primarily by higher tax rebates and remissions of $2.2 million (Tax Related Expenditures & Revenue).

Table 2 - FEDCo

Department / Branch	Annual Expenditure Budget	Annual Net Budget	Actual Net as % of Annual Net Budget	YTD Net Surplus / (Deficit)	Forecast Surplus/  (Deficit)
	$000	$000	%	$000	$000
Elected Officials	10,309	10,309	46%	206	500
Office of the City Auditor General	1,567	1,567	36%	5	-
City Manager's Office	4,069	3,769	40%	(39)	(60)
Real Estate Partnerships & Development	6,273	5,688	51%	(3)	20
Finance	32,317	26,077	47%	383	431
City Clerk & Solicitor	20,852	18,491	41%	67	(174)
City Operations
City Operations DCM's Office	848	848	58%	2	-
Organizational Development & Performance	11,851	11,800	45%	6	10
Human Resources	14,363	14,363	47%	4	-
Information Technology Services	44,536	44,530	52%	29	20
Corporate Communications	5,014	5,014	46%	51	50
	76,612	76,555	50%	92	80
Infrastructure Services & Community Sustainability
DCM's Office IS & CS	1,232	1,232	48%	21	-
Community Sust. - Economic Development	5,528	5,528	26%	11	-
Rail Implementation	6,729	-	0%	-	-
	13,489	6,760	30%	32	-
Non Departmental Accounts
Corporate Benefit Provision	8,335	8,335	50%	(75)	-
Capital Formation Costs	169,437	139,020	75%	2,881	3,375
Corporate Common Expenditures	(9,572)	(9,794)	72%	1,161	-
Efficiency Savings	(2,493)	(2,493)	7%	(1,077)	(220)
Corporate Common Revenue	-	(61,516)	64%	1,455	2,000
Tax Related Expenditures & Revenue	31,193	(166,402)	54%	(2,461)	(2,223)
Total Non Departmental Accounts	196,900	(92,850)	31%	1,884	2,932
Property Tax Revenue	-	(1,237,094)	100%	-	-
Total	362,388	(1,180,728)	101%	2,627	3,729

Agriculture & Rural Affairs Committee (ARAC)

Actual net expenditures in Q2 were on budget and are forecast to be on budget at year end.

Table 3 - ARAC

Department / Branch	Annual Expenditure Budget	Annual Net Budget	Actual Net as % of Annual Net Budget	YTD Net Surplus / (Deficit)	Forecast Surplus/  (Deficit)
	$000	$000	%	$000	$000
Development Review Process (Rural)	3,301	3,301	39%	33	(70)

Community & Protective Services (CPS) Committee

While the mid-year position is positive, it is expected that at year end there may be a deficit of $2.142 million representing 0.4% of the net budget of the programs reporting to CPS in the programs reporting to CPS.  Significant items are:

· Fire Services - deficit of $3.181 million is due to unrealized productivity savings, increased Workers Safety Insurance Board cost and increased overtime spending.  The productivity savings are directly related to the Barrhaven South station and are expected to be realized in 2012.

· Paramedic Services - surplus of $2.730 million results from increased provincial revenue to maintain 50/50 funding ratio. The 2012 budget will be adjusted to reflect this increase, 

· Child Care Services – surplus $0.670 million:  increased provincial subsidies and higher revenues from income testing

· Parks, Recreational & Cultural Services – deficit of $2.361 million is due to lower than anticipated revenue as a result of construction causing facility closures at locations such as Splash Wave Pool and Centrepointe Theatre and a drop in memberships which is indicative of market competition. Also, the Woodroffe Watermain replacement project impacted the Departments ability to generate expected revenues at the Nepean Sportsplex. Management will continue to monitor these trends, identify mitigating measures and report back in Q3.

Table 4 – CPS

Department / Branch	Annual Expenditure Budget	Annual Net Budget	Actual Net as % of Annual Net Budget	YTD Net Surplus / (Deficit)	Forecast Surplus/  (Deficit)
	$000	$000	%	$000	$000
Emergency & Protective Services
General Manager's Office	677	677	56%	(28)	-
Security and Emergency Management	4,421	4,264	43%	(28)	-
Fire Services	131,417	130,660	50%	(967)	(3,181)
Paramedic Service	69,598	31,568	45%	(140)	2,730
By-Law & Regulatory Services	18,101	(6,224)	59%	(275)	-
	224,214	160,945	48%	(1,438)	(451)
Community & Social Services
General Manager	298	298	39%	34	-
Employment & Financial	207,912	56,257	51%	(374)	-
Child Care Services	97,537	23,124	25%	1,323	670
Long Term Care	52,770	9,639	56%	(475)	-
Housing Services - CPSC	154,207	97,021	50%	774	-
Community Development & Funding	21,810	21,444	50%	140	-
	534,534	207,783	48%	1,422	670
Parks, Recreation & Cultural Services	131,554	73,200	50%	(23)	(2,361)
Parks Buildings & Grounds	62,274	54,251	44%	390	-
Total	952,576	496,179	48%	351	(2,142)

Environment Committee (EC) – Tax Supported Programs

A year-end surplus of $2.6 million in tax supported programs is anticipated at year end.

Solid Waste Services - $3.2 million surplus:  reduced leachate monitoring / hauling costs along with higher revenues due to improved market commodity prices for recycling material. A number of expenses related to programs such as: new and replacement green / blue/ black bins; external services for grinding and processing of leaf, yard and infested Emerald Ash Borer trees; and green bin advertising fees were under budget at Q2.  It is expected that these costs will be incurred in the latter half of the year.

Forestry Services – $0.5 million deficit: extensive windstorms in April and July have caused significant tree damage resulting in increased overtime and use of external crews.

Table 5 - EC

Department / Branch	Annual Expenditure Budget	Annual Net Budget	Actual Net as % of Annual Net Budget	YTD Net Surplus / (Deficit)	Forecast Surplus/  (Deficit)
	$000	$000	%	$000	$000
Infrastructure Services	7,207	6,546	66%	111	-
Community Sustainability - Environmental	2,904	2,904	51%	(50)	(40)
Solid Waste Services	67,685	22,530	-22%	3,325	3,159
Forestry Services	12,098	12,098	47%	(247)	(500)
Total	89,894	44,078	15%	3,139	2,619

Planning Committee (PC)

Planning and Growth Management’s deficit is largely due to shortfalls in development application revenues and sewer connection permit revenues. As of Q2 2011, the year-to-date development application revenues are down 17% from the first six months of 2010.

Table 6 - PC

Department / Branch	Annual Expenditure Budget	Annual Net Budget	Actual Net as % of Annual Net Budget	YTD Net Surplus / (Deficit)	Forecast Surplus/  (Deficit)
	$000	$000	%	$000	$000
Planning & Growth Management	17,944	558	237%	(487)	(1,085)
Building Code Services	15,807	(4,381)	57%	-	-
Housing Services - PC	409	409	45%	18	-
Total	34,160	(3,414)	29%	(469)	(1,085)

Transportation Committee (TC)

The projected year end deficit of $0.660 million is primarily as a result of insurance claims based on claims to date and historical data for the Roads and Traffic Maintenance Branch.

Table 7 – TC

Department / Branch	Annual Expenditure Budget	Annual Net Budget	Actual Net as % of Annual Net Budget	YTD Net Surplus / (Deficit)	Forecast Surplus/  (Deficit)
	$000	$000	%	$000	$000
General Manager Public Works	1,666	1,666	49%	40	-
Traffic Management and Operational Support	13,311	13,177	49%	285	-
Roads & Traffic Maintenance	116,846	114,688	56%	(155)	(570)
Parking Operations	15,687	-	0%	(116)	-
Fleet Services	3,702	3,153	348%	(189)	-
Transportation Planning	2,578	2,523	47%	41	(90)
Total	153,790	135,207	65%	(94)	(660)

Service Ottawa Program - Update

Efficiencies approved as part of the 2011 budget process were contained within Departmental budget submissions and are on target for being realized by the end of 2011. A detailed Service Ottawa report outlining the approach to the next three years will be submitted to Council in the fall of 2011.

Disposition of Year End Surpluses

Table 8 shows the forecast year end position after the transfer of program surpluses to various reserves.  The remainder represents the forecast year end position that would be funded from the City wide reserve fund.  In accordance with Council policy, any year end surpluses in the Solid Waste, Housing and Child Care programs would be transferred to reserve funds that support those programs.  Surpluses in the winter maintenance program would be used first to offset any deficits in the roads and traffic maintenance division, and secondly to offset any other deficits in City expenditures, prior to being be transferred to the Winter Maintenance Reserve.  Based on the forecast to year end, it is not anticipated that there will be funds available to transfer to the Winter Maintenance Reserve.

Table 8 – Forecast disposition of the year end surpluses and deficits

	$000
Projected 2011 Surplus / (Deficit)	2,391
Program surpluses to reserve funds under delegated authority
Transfer to Solid Waste Reserve	(921)
Transfer to Child Care Reserve	(670)
Surplus/(Deficit) after adjustments made under delegated authority	800

Capital Projects / Programs

Document 2 provides a listing of the capital program provided by the Department/Branches that are tax supported.  Separate Q2 reports for Transit Services, Rate Supported, Public Health and Library Services will be submitted to each respective Board / Commission

The listing identifies the lead department, Ward, financial status – budget versus actual results and anticipated completion date.  The total for capital works in progress is $3.6 billion, of which $1.1 billion is uncommitted to date.  The capital listing indicates that projects are generally on track with no significant issues noted.

Q2 Compensation Results

Document 3 provides compensation information showing the actual salary / benefits and overtime costs incurred by departments for Q2 versus the full year budget.  For the departments being reported in this Q2 report to FEDCo, actual overtime costs as a percentage of the annual budget are 70% spent.  The main area contributing to these results is in Public Works – Roads & Traffic Maintenance.  Overtime usage in the first quarter was higher than anticipated due to numerous storm events on week-ends and during evening hours. 

Staffing – Retirements

City Council at its meeting of March 24, 2010 approved the following motion with respect to positions that become vacant due to retirement:

“That staff routinely analyze each position that will become vacant due to retirement looking at the job description, compensation level and whether work could be consolidated with another position and report to Committee on the results of such analysis on a quarterly basis.”  

Results up to Q2 2011 indicate that 164 positions were vacated by active employee retirements.  Of this total, 131 positions were planned for staffing with no change in job requirements.  Five positions were placed on hold while job and organizational requirements were examined.  A few positions were reviewed under our job evaluation system with 2 positions re-evaluated and 3 revised to create alternative positions.  Three positions were deleted from departmental position allocations.  Twenty positions are pending action and will likely be staffed or evaluated under the JE system.

Provision for Unforeseen and One Time Expenditures

The 2011 budget contained a provision of $2.8 million to address expenditures of a one-time nature and unforeseen expenditures that may occur during the year.  To date, Council has approved spending of $0.519 million against this provision.  The balance remaining is $2.281 million.  Document 4 provides a summary of the Council reports authorizing the spending against this provision.

Operating Budget Adjustments and Transfers

A summary of the budget adjustments and transfers made in the second quarter of 2011, either through the delegated authority given to the City Treasurer or through Council-approved reports is reproduced in the following two tables.

Adjustments between departments (Table 9) were made to reflect administrative adjustments and to realign program costs and revenues.  These adjustments do not result in any increase or decrease to the total corporate expenditure or revenue budgets.  Table 10 summarizes the budgets adjustments made that have increased / decreased the City’s overall expenditure or revenue budget. 

Table 9 - Inter & Intra-departmental Budget Adjustments & Transfers

	$ Millions
Corporate wide reduction in discretionary expenditures as adopted by Council.  This represents reductions to business travel, conference & conventions and receptions.	0.302
Corporate wide advertising reduction as adopted by Council.  Amendments to the necessary by-laws were made to remove non-mandatory notification in print media.	0.800
Allocation of Non Departmental vacancy provision.  This will allow for greater certainty in managing the overall vacancy provision.	7.285
Transfer 3 FTE from Human Resources to Information Technology.	0.241
Transfer 2 FTE from Financial Services to Human Resources.	0.183
Transfer 2 FTE from Fleet Services to Financial Services.	0.131
Transfer 1 FTE from Fleet Services to Fire Services.	0.058
Transfer 1 FTE from Roads to Traffic Maintenance.	0.064
Transfer 1 FTE from Planning & Growth Management to DCM's Office Infrastructure Services & Community Sustainability.	0.063
Realignment of the housing and poverty reduction from GM's Office in Social Services to Housing Services.	10.000
Environmental Services Department Strategic Alignment Initiative.	0.790
Corporate advertising reorganization from Corporate Communications Dept. to Parks, Recreation & Cultural Services.	(0.675)

Table 10 – Budget Adjustments and Transfers Impacting Overall Expenditure / Revenue

Nature of Budget Adjustment	$ Millions	Funding Source	Net Effect on Budget Revenues and Expenditures
Best Start Fee Subsidy budget realignment with new funding.	0.185	Provincial	Increase in Revenue and Increase in Expenditure
Additional funding for the Rent Bank Program.	0.391	Provincial	Increase in Revenue and Increase in Expenditure
Adjustment to reflect federal funding for the Homelessness Partnership Strategy.	1.723	Federal	Decrease in Revenue and Decrease in Expenditure

Capital Budget Adjustments

Document 5 provides a listing for the information of Committee and Council of all capital budget adjustments that have been processed under delegated authority since April 2011.  These have been processed under the authority delegated to the City Treasurer under By-law 2009-231.

Document 6 provides a listing of capital budget adjustments that require Council approval as they exceed the delegated authority limits established in By-law 2009-231.  An explanation for each adjustment is also provided by the requesting department.

RURAL IMPLICATIONS

There are no rural implications.

CONSULTATION

The purpose of this report is administrative in nature and therefore no public consultation is required.  All Departments reporting to Committee were consulted in the preparation of this report.

LEGAL IMPLICATIONS:

There are no legal impediments to implementing the recommendations of this report.

RISK MANAGEMENT IMPLICATIONS

There are no risk implications.

FINANCIAL IMPLICATIONS

As outlined in the report.

TECHNOLOGY IMPLICATIONS

There are no technology implications with this report.

CITY STRATEGIC PLAN

There are no impacts on the City’s Strategic Plan.

SUPPORTING DOCUMENTATION

Document 1 - 2011 June 30 Operating Summary Operating Results

Document 2 – Capital Works in Progress

Document 3 – 2011 Q2 Compensation Summary

Document 4 - Provision for Unforeseen and One Time Expenditures Summary

Document 5 – Capital Budget Adjustments processed under Delegated Authority

Document 6 – Capital Budget Adjustments requiring Council Approval

DISPOSITION

Upon approval of this report, Financial Services will process the necessary capital budget adjustments.