Annual Operating Variance & Timeline
The City's operating expenses include providing services, maintaining facilities, infrastructure, equipment, systems, and vehicles. These costs are covered by an operating budget made up by property tax, user fees and more. We manage our finances carefully, following Municipal Government Act, City Charter, and Council Policy guidelines, and only budget what's necessary to operate our City Services. We aim to reduce costs, increase revenue, and avoid financial shortfalls.
When we can save money, usually due to City service adjustments, higher-than-anticipated investment income, or lower salary and wage expenses, we achieve a favourable operating variance. These variances are closely monitored and reported to Council during the One Calgary Service Plans & Budgets discussions in November and with the release of the Performance Report in March. The final numbers are confirmed in The City's Annual Financial Report in May.
Council can allocate these funds to support Calgarians, businesses, and the community. You can learn more about the timeline and investments made to date below.
2023 Annual operating variance timeline and finalization
- The Mid-Year Performance Report provides a transparent and accountable way to inform Council and Calgarians on The City’s progress and challenges towards delivering the service plans and budgets during the first six months of the year.
- This report also includes The City’s first projected favourable operating variance estimate.
As 2023, June 30, the favourable year-to-date operating variance was estimated at $165.6 million. Higher corporate franchise fee revenue ($76.7M) due to higher energy prices increased the 2023 estimate.
- The City’s annual operating variance projected as of September is shared with Council during the One Calgary Service Plans & Budgets deliberation.
- Council can choose to invest a portion of the annual operating variance for the following year during budget deliberations.
In November 2023, Council committed $70 million to fund 2024 investments, including social equity, public safety and transit services that support citizens’ access to affordable housing, provide emergency support to Calgarians experiencing vulnerabilities, and increasing staff to address safety on transit and at stations.
- The Year-End Performance report includes an updated preliminary 2023 annual operating variance value.
- The final annual operating variance is confirmed in April as part of the Annual Financial Report.
- The Annual Financial Report provides a comprehensive view of the annual consolidated financial statements, including ENMAX, a wholly owned subsidiary and seven Related Authorities. This report is a 1 May legislative requirement in the Municipal Government Act. Public Sector Accounting Standards are used to prepare the report requiring an external audit opinion of the financial statements. The Annual Financial Report is shared with citizens and Council once finalized and made public at City libraries and on our Financial Reports on calgary.ca before 1 May.
Last year, Council leveraged the then projected $65 million in favourable operating variance for critical, responsive measures to provide support and investment for our community, including maintaining public transit fees at 2022 levels, supporting Calgary’s Mental Health and Addiction Strategy, and increasing support for Calgary Fire Department by increasing support firefighters and response times.
In March 2023, The Year-End Performance report projected an operating variance of $258 million.
Council approved the Annual Financial Report with a $258.7 million operating surplus. Council also allocated $32 million as a one-time budget increase for Calgary Transit to offset pandemic impacts. As a result of investment made in November and April, a total of $161.7 million remained uncommitted for Council. The remainder is transferred to the Financial Stability Reserve.
Last year, Council allocated $38 million to support Calgarians and businesses with several capital initiatives funded by the estimated 2021 annual operating variance. As these were budget items for 2022, they did not impact the 2021 operating variance but reduced the amount available for future allocation.
The 2021 Year-End Accountability Report, shared with Council, noted a preliminary annual operating variance of $147 million.
The final amount of the audited 2021 annual operating surplus was $143 million. In November 2021, Council allocated $38 million of the 2021 annual operating variance, leaving $105 million uncommitted for Council.
One-time investments that further supported Calgarians
Additional Calgary Fire support
An additional $10 million was directed to Calgary Fire to further support firefighters and response time performance.
Public transit offsetting costs for Calgarians
We’re keeping public transit affordable and maintaining our service levels with a $3 million investment. Transit fees are locked in at 2022 rates, we’ve enabled kids 12 and under to ride free, and we’ve lowered the cost of a weekend family pass. An additional $5 million was directed to transit bus shelters and benches.
Additional Mental Health & Addition Support
Continuing to support Calgary’s Mental Health and Addiction strategy with an additional investment of $19 million to maintain existing community programming, and activate new partnerships between the Calgary Police and community organizations.
Enabling city partners operations and programming
A total of $12 million of one-time funding is being used to supporting city partners services and programs within our communities. These City partners include: Calgary Arts Development Authority, Parks Foundation Calgary Sport Calgary, Tourism Calgary (arts and culture) Platform Calgary, and Vibrant Communities Calgary.
Additional civic partner investments in Calgary Economic Development and Tourism were made to progress Calgary’s global reputation. $5.8 million will help make Calgary a place to do business and tour.
Establishing an Indigenous Relations Office
The City of Calgary’s work in Indigenous Relations is guided by the Indigenous Relations Office, The City’s Indigenous Policy, and the White Goose Flying Report. A $1.5 million investment was made as part of our committed to taking an all-nations approach to Indigenous Relations.
Waving patio permit and heritage grants
The City offset outdoor patio & cafe permit fees for business, expanded the non-residential Heritage Conservation Grant Program and initiated the Residential Tax Heritage Incentive Program.
Frequently Asked Questions
Operating variances are calculated throughout the year. It compares the amount of inflows of funding sources and outflows of expenditures. If the inflows of funding are greater than the outflows, a favourable variance arises. Inflows and outflows follow City Budget and Accounting Policies.
The City does not budget for an operating variance. Council Budget Policy CFO004 Section 5.3(a) indicates that The City will not run an actual deficit and Section 1.2 indicates The City will present a balanced operating budget.
Favourable variances can occur due to several factors, including City service adjustments, salary and wage, and higher than anticipated investment income. When a favourable variance occurs, it aligns with the Municipal Government Act, City Charter and Council Policy and reflects the commitment we made to reduce costs, grow revenues and avoid financial shortfalls.
When the financial statements are finalized, and the year-end audit is completed in April, the final annual operating surplus is known and captured in the Annual Financial Report. The total amount is then transferred to the Fiscal Stability Reserve/Budget Savings Account (FSR).
There are three sources:
- (Once confirmed by the Annual Financial Report in May) the annual operating surplus,
- Investment income earned on the balance of the FSR and;
- Previously committed one-time contingent funds that are no longer required. As an example, contingency funds held for potential liabilities that resolve more favourable than anticipated.
What is the difference between the Year-End Performance report and the Consolidated Financial Statements?
The Year-End Performance Report is a City-specific report. It comes to Council in March for the previous year’s end, provides the status of the One Calgary Service Plans and Budgets and City efforts to deliver on citizen priorities. The report does include an estimated operating variance before it is finalized in the Annual Financial Report, using actual operating and capital financial figures based on the budget and as outlined in the Municipal Government Act. As presented to Executive Committee in March, the Year-End Performance report shows an estimated value of the operating variance as of January 31.
The year-end consolidated financial statements follow all Canadian Public Sector Accounting Standards. This means the year-end figures are further reconciled. The report provides a comprehensive view of the annual consolidated financial statements as of 31 December, including ENMAX, a wholly-owned subsidiary and seven Related Authorities. This report is a 1 May legislative requirement in the Municipal Government Act. Public Sector Accounting Standards are used to prepare the report requiring an external audit opinion of the financial statements. The Annual Financial Report is shared with citizens and Council once finalized and made public at City libraries and on our Financial Reports in May.
Why do the Performance Report and the Year-End Consolidated Financial Statements show different values?
The City continues to refine the operating variance as the external auditor conducts their work. With time, more information becomes known about the year-end. For example, invoices for goods and services consumed the previous year continue to be sent to Corporate Accounts Payable in March. Accrual accounting procedures would then adjust the favourable operating variance for those amounts. The City continues to adjust the operating variance for accuracy. In addition, there are small reconciling items between our budget reporting to Council in March and the final audited consolidated financial statement.
When the financial statements are finalized and the year-end audit is completed in April, the final annual operating surplus is known and captured in the Annual Financial Report released in May.
The Annual Financial Report is made available at public libraries and on the Financial Reports webpage.