Operating Variance Report for the Year Ended December 31, 2018

Operating Variance Summary ($ Millions) Variance ($M) Favourable / (Unfavourable) 2018 Year-End Results Budget Actual Variance City Operations 2,254.2 2,166.5 87.7 Agencies 2,015.6 1,990.7 24.8 Corporate Accounts (94.5) (129.2) 34.7 Total Variance 4,175.2 4,028.0 147.2 Less: Council Directed/Legislative Requirements (21.4) Adjusted Variance 125.8 % of Gross Budget 1.1% In accordance with Council and legislative requirements, a portion of the surplus, $21.434 million net, will be allocated to reserve funds primarily for the following Programs and Agency: Toronto Building, City Planning, and Exhibition Place. As noted in Table 1 above, for the year ended December 31, 2018 Tax Supported Operations experienced a favourable net variance of $147.200 million or 1.3 percent of budgeted gross expenditures. The key factors contributing to the favourable year-end variance are lower than planned salary and benefits from vacant positions, and revenue driven by volume in City Operations, as well as under spending in employee benefits, utility costs, non-labour costs by Toronto Transit Commission. It is important to note lower than budgeted Municipal Land Transfer Tax revenue of $82.403 million net due to lower residential market activity. An overview of the key variance drivers can be found in the "Comments" section of this report as well as in a detailed summary provided in Appendix E. Consistent with the Council approved Surplus Management Policy, at least 75 percent or $94.324 million will be allocated to the Capital Financing Reserve and the remaining $31.441 million will be allocated to underfunded liabilities and/or reserve funds. Rate Supported Programs: Rate Supported Programs reported a favourable year-end variance of $65.414 million. The favourable variance is primarily attributed to both underspending and over achieved revenue in Toronto Water. Table 2: Rate Supported Net Variance Summary ($ Millions) Variance ($M) Favourable / (Unfavourable) 2018 Year-End Budget Actual Variance Solid Waste Management Services 0.0 0.0 0.0 Toronto Parking Authority (66.5) (67.0) 0.4 Toronto Water 0.0 (65.0) 65.0 Total Variance (66.5) (132.0) 65.4 For the year ended December 31, 2018 Tax Supported Operations experienced a favourable variance of $147.200 million net. After meeting Council and legislative requirements, the year-end surplus available for distribution is $125.765 million net. As per City Council's Surplus Management Policy, 75 percent of the 2018 final year-end surplus of $94.324 million will be allocated to the Capital Financing Reserve and the remaining 25 percent or $31.441 million will be allocated to underfunded liabilities and/or reserves/reserve funds.