THUNDER BAY – The City of Thunder Bay is on track to come out of 2021 millions ahead of its budget targets, with good news on pandemic costs and conventional operations.
The city budgeted for a $7.2 million financial hit from the COVID-19 pandemic this year, but a third quarter variance report from city treasurer Linda Evans now forecasts COVID costs at $5.5 million, based on trends to the end of September.
With $4.3 million in federal-provincial COVID relief funding left over from 2020, the city would need to cover just $1.2 million in pandemic costs from its own reserves.
The report also projects a favourable balance of $5.6 million in tax-supported operations, amounting to roughly 2.1 per cent of the budget. Administration typically recommends putting such surpluses into the city's stabilization reserve, but it will be up to council to decide when numbers are finalized in the new year.
Councillors praised administration for the result, with Mark Bentz saying it was particularly impressive given what he described as tight budgets passed by the current council.
“Council has been passing near inflationary type budgets,” he said. “To have our administrators come in with surpluses is really indicative of excellent financial management.”
Coun. Rebecca Johnson sounded a lone note of caution on the favourable variance, calling it a clear sign the city had over-budgeted.
“That says to me we’ve over-budgeted, I don’t care how we look at it,” she said. “We have collected that [$5.6 million] from the tax payer. Do we give that back to them in some shape or form?”
City manager Norm Gale disagreed, calling the variance “a small surplus on a tight budget.”
Evans added the main factors behind the positive variance had been unpredictable.
The biggest contributor to the $5.6 million positive variance was around $2 million more than expected in payments following the settlement of assessment appeals from the previous tax year, she said.
Other major factors were lower than expected “winter control” costs like snow clearing, projected to come in $500,000 below budget, and a more than $500,000 dividend from its stake in Synergy North, and savings from extending hiring gaps of roughly $400,000.
No major variances were projected in rate-supported operations, though administration forecast a $500,000 unfavourable variance for solid waste operations due to the COVID-related closure of businesses, and a $600,000 favourable variance in waterworks, attributed to higher user fee revenues and vacancy savings.
