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January 9, 2012
City of Toronto on track to build a sustainable, affordable and well-managed city

Today, Toronto's Budget Committee approved the proposed 2012 City Budget, moving the budget process forward to the City's Executive Committee.

The approval comes after the Budget Committee considered reports on the City's 2011 year-end operating budget variance, final 2011 property tax assessment growth and Service Review Program.

The City's projected year-end surplus for 2011 is $154 million - of which $115.5 million has been approved by the Budget Committee for the capital financing reserve as part of a plan to avoid $700 million in debt financing for the City's 10-Year Capital Budget and Plan. The remaining $38.5 million or 25 per cent of the 2011 projected surplus is recommended to rebuild the City's Tax Stabilization Reserve, the Employee Benefit Liability Reserve and the Extreme Weather Reserve.

"It has been Council's policy since 2004 to use surplus funds to pay for capital costs. We immediately need a good portion of the $154 million surplus to go towards funding buses, streetcars and subways," said Budget Committee Chair Mike Del Grande (Ward 39, Scarborough-Agincourt). "The City's efforts in permanently reducing $355 million from its annual expenditures coupled with additional efforts to introduce $700 million in non-debt financing for the capital budget and plan has allowed us to reduce the City's reliance on one-time surplus revenues from $346 million to $77 million. This is a major breakthrough in bringing the City's expenses more in line with its revenue."

"This is simply best practices in financial management," said City Manager Joe Pennachetti." With the uncertain global economic outlook, we need to safeguard and restore City reserves to respond to the needs of Toronto residents and withstand the greater occurrence of extreme weather events."

As approved by the Budget Committee today, an additional $700 million in new financing for the 2012-2021 Capital Budget and Plan is expected to come from proceeds from the use of future operating budget surpluses in accordance with the City's surplus policy, potential monetization of City assets and expected provincial and federal assistance. These actions are intended to minimize the amount of property taxes used to pay debt financing costs while maintaining the City's debt service ratio below its 15 per cent threshold in relation to property taxes. The proposed 10-year Capital Plan also eliminates the TTC's $2.3 billion financing shortfall by reducing the capital projects required and by introducing $700 million in new non-debt financing.

"Using future budget surpluses towards the capital budget is good financial planning," said Chief Financial Officer Cam Weldon." The City should not rely on budget surpluses to pay for everyday expenses as they're unpredictable as shown in the reduced surplus projection for 2011 relative to 2010. By reducing our reliance on one-time revenues we'll be able to know exactly where money will come to pay for City services in the future."

Also considered in today's Budget Committee meeting was a report on the City's final 2011 assessment roll which confirms that the City will receive an additional $8.8 million in property tax revenue in 2012 from new construction. As a result of the new revenue, the Budget Committee approved the use of $2.1 million to protect programming at 12 Community Centres, $0.4 million for 58 Student Nutrition Programs from schools across the City, and $0.3 million for two pools at Bedford Park Community Centre and Sir Wilfrid Laurier Collegiate Institute. The remaining $6 million is recommended to reduce the one-time revenue draw from the Tax Stabilization Reserve used in the 2012 Operating Budget balancing strategy from $83 million to $77 million.

In an effort to achieve fiscal sustainability, the City in 2011 conducted a Service Review Program consisting of a Core Service Review, Service Efficiency Studies and a User Fee Review.

Approximately 28 Core Service Review related actions have been submitted in the 2012 operating budget for an estimated $49.42 million gross and $42.82 million net of savings as part of budget reductions. The Service Efficiency Studies conducted by external firms have identified initial savings estimated between $167.0 million to $249.1 million to be realized in 2012 and future years. Changes to existing user fees and the introduction of new user fees will also generate additional revenues totalling $14.6 million (exclusive of fees in Toronto Water and Solid Waste Management Services) as part of the 2012 Operating Budget. In total, the proposed City budget includes $267 million in budget reductions and efficiencies, $86 million in service level adjustments to services and $345 million in increased revenue.

"Continuing into 2013, the City will find savings by identifying opportunities for consolidation and rationalization of shared services and breaking down remaining silos," said Budget Committee Chair Mike Del Grande. "With better information, we'll be able to make more informed decisions, forge a long-term vision for what Toronto can become and deliver greater value for every tax dollar."

On January 12, the City's Executive Committee will consider the proposed budget from the Budget Committee. Toronto City Council will review and approve the final 2012 Operating Budget and 2012-2021 Capital Budget and Plan at its meeting on January 17-19, 2012.

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Toronto is Canada's largest city and sixth largest government, and home to a diverse population of about 2.7 million people. Toronto's government is dedicated to delivering customer service excellence, creating a transparent and accountable government, reducing the size and cost of government and building a transportation city. For information on non-emergency City services and programs, Toronto residents, businesses and visitors can dial 311, 24 hours a day, 7 days a week.

Media Contact
Wynna Brown, Manager
Manager, Media Relations and Issues Management

Cindy Bromley
Manager, Finance Communications



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