City hall generated a whopping $31-million dollar surplus in 2023 municipal budget

An undated image of London city hall. (Daryl Newcombe/CTV News London)

Just weeks after wrapping up difficult multi-year budget deliberations, council is receiving a financial update about how a financial windfall left over from 2023 will be redistributed.

A report to the Corporate Services Committee details the sources of a combined $31 million surplus from last year’s municipal budget.

 

An overview of the net financial positions at the City of London in 2023:

• $28 million surplus in property tax supported budget (2.5 per cent of gross budget)
• $3 million surplus in the water budget
• Balanced year-end position for the wastewater budget

“The (property tax supported) surplus is largely attributable to three temporary external factors outside the control of the City of London – interest rates, provisions for tax appeals & uncollectable taxes, and Green Bin implementation delays,” reads the report.

Higher than anticipated interest rates meant the city’s financial investments did better than anticipated.

Operating dollars set aside for the launch of the green bin collection program were not needed in 2023 because the program launched in mid-January 2024.

The financial update adds, “The Water Budget surplus is primarily from higher than anticipated residential consumption and growth in the city.”

The Deputy City Manager of Finance Supports refers to the existing policy to reallocate surplus dollars as “prudent.”

 

The council-approved surplus/deficit policy prescribes

• 50% to reduce future debt issuance ($14 million)
• 25% to council’s Community Investment Reserve Fund ($7 million)
• 25% to the Capital Infrastructure Gap Reserve Fund ($7 million)

Similarly, the Surplus/Deficit Policy for the Water Budget divides the $3 million surplus evenly between debt reduction and a reserve fund.

Provincial changes to the collection of Development Charges (DCs) paid on new construction required a contribution to reserve funds.

“The total, unfunded exemptions that are required to be paid by the City for 2023 to ‘backfill’ the City Services Development Charges Reserve Funds is $16.8 million,” the deputy city manager writes.

Contingency reserves were utilized to finance DC exemptions in 2023.

“Of the $16.8 million total, $9.7 million was funded from the Property Tax Operating Budget Contingency Reserve, $1.1 million from the Water Budget Contingency Reserve, and $6.0 million from the Wastewater Budget Contingency Reserve. Recommendation,” the report details.

In addition, “[A recommendation in] this report provides for the replenishment of the Contingency Reserves to the extent that there is available surplus, noting that there is insufficient surplus in the Wastewater & Treatment budget and therefore this represents a net drawdown on its reserve.”

City staff also recommend providing $33,364 from the surplus to offset a deficit in the budget of London Middlesex Community Housing (LMCH).

In a letter, LMCH CEO Paul Chisholm explains, “LMCH continues to experience fluctuations in tenant rental revenue with significant increases in bad debt write off for former tenants and rent forgiveness for current tenants.”

The Corporate Services Committee will consider the report during its meeting on April 15.