City Hall projecting another large budget surplus for third year in a row

At the half-way point of the 2025 municipal budget, an operating budget monitoring report projects another big surplus this year.

Specifically, city hall is tracking to have $23.6-million unspent in its property tax supported budget by the end of the fiscal year (1.7 per cent of total gross budget), plus a surplus of $2.3 million in the Water budget and $4.3 million in the Wastewater Budget.

The projection totals $30.2 million, an amount that could increase or decline based on spending during the second half of the year.

It would be the second significant budget surplus in the city’s 2024-2027 multi-year budget, and third since the current council was elected.

“It is an over $1 billion budget that we are working with, so there are going to be variances,” explains budget chair Elizabeth Peloza.

Last November, city council recommended amendments to the mayor’s draft budget that slightly lowered the property tax increase from 7.4 per cent to 7.3 per cent.

It represented a $263 increase on the average London home with an assessed value of $252,000.

Council also approved increases of $8 (1.5 per cent) to the average annual water bill and $38 (5.4 per cent) to the average annual wastewater/sewer bill.

According to a staff report, the primary factors contributing to the projected 2025 Operating Budget surplus include:

• $10.6 million Social & Community Support Services (personnel variance, Ontario Works Payments, Childcare Funding, Housing Stability Services, Homelessness Prevention Program, Municipal Rental Assistance Program)
• $4.9 million Garbage and Recycling (higher than budgeted user fees primarily in W12A landfill tipping fee)
• $3.4 million Corporate Services (primarily personnel variance)
• $4.1 million Other Service Areas

If the surplus remains by year-end, city staff recommend allocating $10.6 million in the Operating Budget Contingency Reserve account in accordance with city hall’s existing Surplus/Deficit Policy.

That allocation would offset anticipated costs related to the $3.6 million Temporary Warming Centre Framework for homeless Londoners, plus the mayor’s direction for a 60 unit micro-modular homeless shelter site which has a preliminary cost estimate of $7.0 million (one-time capital costs plus operating costs through March 31, 2027).

The remaining $13 million would be distributed between Council’s Community Investment Reserve Fund, the Unfunded Liability Reserve Fund, the Infrastructure Gap, and debt avoidance.

“We have surplus and deficit policies and we follow those policies,” Peloza told CTV News. “There’s debt the city still needs paid off, there’s unfunded liabilities, future infrastructure projects coming up, (and) one of our reserve funds to do with the water (system) is actually completely depleted.”

The surplus dollars collected for Water and Wastewater would be directed towards reserve funds and some debt avoidance in future Water budgets.

In 2024, city hall posted a staggering $58.8-million surplus, representing 4.4 per cent of the gross budget.

The 2023 operating budget surplus was $28 million.

The Infrastructure and Corporate Services Committee will consider the operating budget monitoring report on Oct. 6.