City releases third-quarter financial forecast, $3.0 million surplus highlighted

Based on the City’s third quarter (Q3) forecast, City Administration estimates at the end of this fiscal year, the 2023 Operating Budget will have a surplus of $3.0 million. In addition, the City’s Utilities are expected to realize a $10.9 million surplus.

“The City has benefitted from our intentional efforts to achieve year-over-year savings, along with several favourable external factors - both have contributed to the City’s projected $3.0 million surplus,” says Kari Smith, Director of Finance.

With intentional effort, the Administration put in place discretionary hiring and spending freezes, with approximately $5.1 million in savings expected due to:

• approximately $800,000 in savings from reduced training investments;
• $3.1 million savings from deferred hiring; and
• $1.2 million in savings from office, maintenance or other expenditure deferrals. 

“While these initiatives have led to savings in 2023, if the City continues with this approach year after year, this may lead to longer-term impacts such as higher future costs of maintenance, and staff training falling significantly behind” adds Smith.

The favourable external factors contributing to the City’s projected Q3 surplus include:

• Relatively minor snow events in 2023 compared with typical years resulted in a projected $3.3 million surplus in the City’s snow and ice management program;
• Higher than anticipated interest rate environment has resulted in $1.5 million in additional investment income;
• Closure of Harry Bailey Aquatic Centre has contributed to an overall surplus for Leisure Centres of $1.7 million; and
• Significant increases to Transit and Access Transit revenues and a quicker return to pre-pandemic ridership resulting in $3.2 million in higher than budgeted revenues.

The favourable variance between the intentional efforts and favorable circumstances detailed above have been used to offset the City’s $5.7 million in targeted annual savings as well as additional base budget challenges such as $3.0 million in Information Technology, and $1.1 million in Facilities Management.

The projected surplus of $3.0 million in 2023 is still preliminary and welcome news but, it is important to note that many of the external factors experienced in 2023 may not continue in future years. This highlights the importance of establishing the recently approved 2024/2025 Budget as sustainable - and with adequately funded service levels for the next two years.

Each year, City of Saskatoon Administration provides mid-year, third quarter and year-end reports to City Council on the fiscal performance of the City’s Business Plan and Budgets. The objective is to keep City Council and residents informed on expenditure and revenue variances from the budget estimates as the fiscal year progresses.

 Visit saskatoon.ca/budget for more information.