Two recent projects that pulled money from Calgary Fiscal Stability Reserve (FSR) have dropped the reserve percentage closer to the lower acceptable limit, but there’s positive relief expected in 2025.
Calgary city councillors got an update at the May 13 Executive Committee meeting on the positive operating variance, aka surplus, from 2024, and how it’s reflected in city reserve status.
City of Calgary Chief Financial Officer Les Tochor told councillors that the average annual surplus over the past 10 years has been $158 million annually, but since 2019, it’s been exceeding $140 million annually.
At the end of 2024, the total favourable operating variance was $276.3 million, with a little more than $107 million coming from investment income, and Planning and Development Services and Corporate contingencies combined contributing $126 million.
“We can see from this at a high level, is that we have some major components that contribute to our trend over the years, and it really is a matter of the variability between years, but those major components have been driving our positive variance during this time period,” Tochor said.
Tochor said that any surplus at the end of the year that hasn’t been directed for a specific purpose would end up in the FSR. He said the minimum for the FSR is five per cent of net revenues, with a target of 15 per cent.
In recent years, the City has hovered between 10 and 12 per cent since 2022, however, councillors were informed last November that the reserve status was down to 7.7 per cent. Additional positive variants to finish up the year lifted it to 12.6.
The recent expense of covering the $28 million Calgary Police Service shortfall, along with another $60 million for the Opportunity Calgary Investment Fund has dropped it back down to nine per cent.
Solid start to 2025
Tochor also updated councillors on the first quarter of 2025, with the City of Calgary already showing a $77 million surplus, with the bulk coming from investment income returns and lower corporate program spending.
That includes lower-than-anticipated contracted services and winter operations, along with lower salaries and overall higher revenue.
“So, that really is distributed across most of the operational side from an impact perspective, and again, a lot of that is on timing of when different initiatives occur,” he said.
Due to the ongoing variability, Tochor said that at this time they predict a $100 million surplus, as at Q1, by the end of 2025. Of that, he said they could comfortably allocate roughly 25 per cent for emerging projects or needs.
Calgary Mayor Jyoti Gondek asked if the surpluses were due to conservative estimating.
“Is that the reason that we’ve had these variances, or are they just because we ended up making more than we thought?” Mayor Gondek asked.
In terms of forecasting and budgeting, CFO Tochor said that Calgary is on the “conservative side of the spectrum,” for budgets and forecasts. That’s driven by a desire not to have a negative outcome, he said.
“If we talk about investment income, we take a look at that from the perspective of what we’re highly confident rate of earning, and we don’t necessarily factor in one-time capital gains, maybe as much as other organizations you might have experiences with,” he said.
“So, if those dollars aren’t there, we could jeopardize having an operational impact.”
Ward 10 Coun. Andre Chabot was happy with what he saw in the report.
“It clearly identifies where we are, how we got here, some of the variances, how well we’re doing on our capital spend compared to previous years and how much we’ve increased our budgeted versus actual on our capital spend program,” he said.
“I think this is a very, I guess, clear demonstration of how well we’re doing, and so far as ensuring we have all the necessary resources to fulfill our capital obligations, for starters, and I applaud you, administration for the work you’re doing and making sure that we are able to deliver those projects in the timeline that we had anticipated.”
