Operating Variance Report for the Year-Ended December 31, 2023

Variance ($Millions) Favourable / (Unfavourable) 2023 December Year-End Tax Supported Operating Variance Summary Budget Actual Var City Operations 3,066.6 2,972.2 94.3 Agencies 2,899.3 2,839.0 60.3 Corporate Accounts (1,057.8) (311.4) (746.4) Total Variance 4,908.1 5,499.8 (591.7) Less: Toronto Building and City Planning (6.2) (25.1) 18.9 Less: Obligations and Reserve Allocations (128.6) 128.6 Total Adjusted Variance (Prior to Backstop Funding) (739.3) As noted in Table 1 above, for the 2023 year-end, Tax-Supported Operations experienced an unfavourable net variance of $739.3 million or 15% of planned expenditures adjusted for Toronto Building, City Planning, obligations and reserve allocations, and prior to backstop funding. The unfavourable variance is driven entirely by the sustained COVID-19 impacts as a result of lower than budgeted intergovernmental funding support. Table 2: 2023 COVID-19 Financial Impacts and Intergovernmental Funding Support COVID-19 Impacts ($Millions) 2023 Budget Fed/Prov Funding Internal Offsets / Savings Remaining 2023 Shortfall Transit 366.4 13.2 353.2 Shelters 317.2 22.6 46.6 247.9 Other Municipal Pressures 161.8 18.8 4.8 138.2 Public Health 87.4 68.5 18.9 0 Total COVID-19 Impacts 932.8 109.9 83.6 739.3 In 2023, the City continued to experience significant financial impacts, both in the form of added costs and revenue losses due to sustained impact of the COVID-19 pandemic. As a result, the 2023 Operating Budget was balanced based on the expectation of continued support funding from the Government of Canada and Province of Ontario with a total budget amount of $932.8 million. At the end of 2023, the City received $109.9 million in intergovernmental funding support, which included $68.5 million specific to Public Health, $18.8 million for Seniors Services and Long-Term Care and $22.6 million for Toronto Shelter and Support Services. In addition to the intergovernmental funding support, the City achieved $83.6 million in offsets associated with projected COVID-19 impacts compared to budgeted estimates, leaving a $739.3 million shortfall in intergovernmental funding. As a result of the intergovernmental funding shortfall, the City's backstop strategy will be used to offset the COVID-19 related 2023 operating budget deficit. This includes a $739.3 million draw from the COVID-19 backstop that will leave the backstop fully depleted by the end of 2024. Table 3: Rate-Supported Operating Variance Summary Variance ($Millions) Favourable / (Unfavourable) 2023 December Year-End Rate Supported Operating Variance Summary Budget Actual Var Solid Waste Management Services 0.0 (19.2) 19.2 Toronto Parking Authority (25.4) (38.0) 12.6 Toronto Water 0.0 (20.9) 20.9 Total Variance (25.4) (78.1) 52.7 The favourable year-end variance is driven by all three Rate-Supported Programs: Solid Waste Management, Toronto Parking Authority, and Toronto Water. Solid Waste Management have primarily reported underspending for the year-end, while Toronto Parking and Toronto Water have realized favourable revenues. Rate-Supported Programs are funded entirely by the user fees that are used to pay for the services provided and the infrastructure to deliver them. Solid Waste Management Services and Toronto Water's respective year-end surpluses, if any, must be transferred to the Waste Management Reserve Fund and the Wastewater and Water Stabilization Reserves respectively, to finance capital investments and ongoing capital repairs and maintenance.

3. City Council approve the recommended expenditure authority as detailed in Appendix D to the report from the Chief Financial Officer and Treasurer.