Today, London City Council approved the 2023 Year-End Operating Budget Monitoring Report, moving forward with City staff’s recommendation to apply the 2023 year-end surplus in accordance with the Council-approved Surplus/Deficit Policy.
The 2023 Property Tax Supported Budget surplus was $28 million and the 2023 Water Rate Supported Budget surplus was $3 million.
“While there are many factors impacting the City’s year-end position, the surplus is largely a result of three temporary, external factors that are outside of our control – higher than anticipated interest rates, delays in MPAC reassessments and delays in the implementation of the Green Bin program,” says Anna Lisa Barbon, Deputy City Manager of Finance Supports. “The surplus will be used to reduce future debt issuance and provide one-time contributions to the Capital Infrastructure Gap Reserve Fund and the Community Investment Reserve Fund in accordance with our policy.”
These external factors are temporary in nature, and it is unlikely that they will continue to persist in the long-term. City staff will continue to monitor budgets and make further adjustments, if necessary, through the City’s Annual Budget Update process.
Moody’s Investors Service has identified the Surplus/Deficit Policy as a contributing factor to the City maintaining its Aaa credit rating – the highest score possible – for 47 consecutive years.
Surplus Allocation
Approximately $14 million from the Property Tax Supported Budget surplus will be allocated to reducing future debt issuance, which in turn helps to reduce future property tax increases for Londoners. This funding allocation will help reduce the $330 million of additional property tax supported debt approved over the 2024-2033 timeframe in the 2024 to 2027 Multi-Year Budget.
Approximately $7 million from the Property Tax Supported Budget surplus will provide a one-time contribution to the Capital Infrastructure Gap Reserve Fund, a funding source that addresses future infrastructure needs to ensure London’s roads, facilities and parks, to name a few, are built, maintained, and operating to meet the long-term needs of the community. Managing infrastructure needs proactively helps to avoid more costly, reactive infrastructure repairs in the future.
Approximately $7 million from the surplus will provide a one-time contribution to the Community Investment Reserve Fund, a funding source that can be used at the discretion of City Council. Prior to the contribution of $7 million from the year-end surplus, the Community Investment Reserve Fund had a balance of approximately $200,000 due to investments made by Council as part of the 2024-2027 Multi-Year Budget.
The $3 million Water Rate Supported Budget surplus will be allocated to water debt reduction and the Waterworks Reserve Fund to address future infrastructure needs.
To learn more about the City of London’s Multi-Year Budget, please visit the municipal budget webpage.