The City of Orillia finished with a $7.5-million surplus on its 2023 net expenditure budget, reported city staff at this week's council meeting.
About $3.2 million of the surplus came thanks to a strong performance from city investments, with the remaining $4.3 million coming from a variety of sources including city contracts, grants revenue, salaries and benefits, and more.
The city also had positive balances across a variety of files, including capital project surpluses, water and wastewater surpluses, and unplanned taxation revenue, among other positive variances, staff noted.
Much of the surplus funds will be returned to reserves identified for funding, with 90 per cent of the remainder going to the general asset management reserve, and the final 10 per cent going to the tax rate stabilization reserve.
Staff noted 62 capital projects, with a combined budget of $35.4 million, were also closed in 2023, with a $9.2 million surplus that was returned to the appropriate reserves.
At Monday’s meeting, Coun. Tim Lauer questioned what the capital surplus meant.
“Exactly what is a surplus?” he said. “When we say we've got $9.2 (million) in capital surplus, does that mean that we planned a project, we put a price on it, and at the end of the project it wasn't that price – it was less – and the accumulated less of all those projects amounted to the $9.2 million?”
City treasurer/CFO, John Henry, explained that capital projects can sometimes come in under budget for a variety of reasons.
“We have an approved budget for certain capital projects … (and) sometimes tenders come in a little bit below that value,” he said. “Sometimes just the nature of the work isn't required, so they only need a partial part of the project, but you're correct … that $9 million would be returned back to the reserves, and we'd apply that to future capital projects.”
Lauer said a $9.2 million surplus is a large figure, and questioned whether the city would benefit from a more “rigorous” estimation and costing process for capital projects.
“There is some recognition that COVID threw a huge loop into the pricing world in general, and it's very hard to get those rates square,” responded Henry. “Things have stabilized a little bit, I think.”
He want on to say that what Lauer "mentioned is something that’s currently in play.”
Mayor Don McIsaac similarly expressed interest in tightening up the budget variances moving forward.
“There's a lot of good information here. It's kind of messy though, just in terms of the variances that we've got,” he said. “I think I've learned a couple things: one, I'll push a little harder at the budget session in the fall about the amount of money we put aside for interest.
“I'm also questioning (our) policy that 90 per cent goes to the reserve, and all that sort of stuff,” he said. “I think we need to look at that because these numbers are significant, and there's been a pattern each year of doing this.”
The figures presented in Monday may be subject to change, pending the results of the city’s annual external audit.
