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New Tecumseth releases current Budget Variance Report

May 9, 2024   ·   0 Comments

By Brian Lockhart

The Town of New Tecumseth released a report on the 2024 forecasted year-end operating financial results and capital projections as of March 31.

Key findings include a forecasted Town surplus of $143,000, a Water and Wastewater balanced budget, and overall capital projects forecasting a favourable variance of $34,000.

The Operating Budget provides for expenses that cover day-to-day expenditures and activities including utilities, insurance, staff wages and benefits, program supplies, and facility or equipment repairs and maintenance. It includes revenues expected to be received from fees and various other use-paid activities like program registrations and ice rentals.

Staff are reporting a year-end surplus of $143,000, created from a favourable revenue variance of $244,000 and an unfavourable expenditure variance of $101,000. These results are very preliminary and are likely to change as the year progresses.

Water and Wastewater are reporting a balanced budget at year-end. As these services are self-funded, any year-end surplus will be transferred to the Water and Wastewater Asset Replacement Reserves.

The Capital budget addresses the requirements of growth and identifies the life-cycle repair, maintenance, and replacement of existing infrastructure, including community centres, fire stations, parks, arenas, roads, and sidewalks.

The 2024 capital budget utilized information from the Town’s Long Range Financial Plan, Asset Management Plans, Master Servicing Plans, Transportation Master Plan, Roads Needs study, as well as projects for growth requirements as contained in the Development Charges Background Study.

The Town’s 2024 Capital Plan includes a total of 165 capital projects valued at $109 million. Staff are forecasting a minor favourable variance of $43,000 at the end of project completion.

It is important to note that capital projects are funded from reserves and not directly from property taxes. Therefore, an unfavourable variance that may occur will not impact taxes but rather increase obligation on the Town’s reserves.

Reserves and Reserve Funds are critically important for financial sustainability.

Categories of these funds, by purpose, are:

• Stabilization reserves are created to help the Town smooth expenses or mitigate future risks.
• Capital from Taxation Reserve is funded from an annual contribution and funds are used to fund new capital works projects that are not related to asset replacement.
• Legislative and Growth – Reserve categories include the Building Code Reserve, Development Charges, CIL Reserve, and Parking Reserve. The use of these reserve funds is legislated, and any project funding must be in line with the legislated usage.
• Gas tax – The Federal Gas Tax funds received by the Town are primarily used to fund the Annual Road Improvement Projects.
• Asset Renewal – These reserves are set aside for the future repair and replacement of existing assets.

The reserves are funded by annual contributions in the operating budget and used to fund capital projects.

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