Cornwall City Council received the Third Quarter Financial Report for 2024 at its meeting on November 26, providing a detailed overview of the city’s operating and capital activities up to September 30. The report highlighted financial variances, key operational challenges, and updates on major infrastructure projects.
Despite challenges such as staff vacancies, legal pressures, and inflationary impacts, the city is on track to meet its financial objectives for the year. However, the report identified several areas of concern, including a shortfall in supplementary taxation, escalating legal expenses, a depleted parking reserve fund, and meeting provincial regulations.
The shortfall in supplementary taxation stems from lower-than-expected revenues from new construction, additions, and renovations. The city had budgeted $1.2 million for supplementary taxes in 2024 but collected only $922,855, resulting in a $277,145 deficit.
Escalating legal fees presented a significant financial strain, with expenditures reaching $760,806 by the third quarter—nearly double the budgeted $394,160. The overage was attributed to a series of legal matters, arbitrations, and grievances. To address this issue, the city hired a municipal solicitor to bring legal services in-house, aiming to manage and reduce these costs moving forward.
The parking program continued to struggle with revenue shortfalls, exacerbated by a depleted parking reserve fund. The program, designed to be self-sustaining, faced a projected $200,000 deficit by year-end, which must now be covered by tax dollars.
On the capital side, the Fifth Street East Reconstruction Project faced increased costs due to new provincial regulations requiring the removal and replacement of contaminated soil. The unexpected expense, estimated at $690,000, will be covered by a mix of funding sources, including savings from other capital projects.
On the positive side, investment income is expected to exceed projections by $1.9 million, offsetting some budget pressures. Additionally, salaries and benefits showed a net savings of $488,000 due to hiring delays.
Councillor Sarah Good expressed interest in understanding the variances, asking, “I noticed we had $300,000 in the tax stabilization reserve—has any of that been used this year?” Tracey Bailey, Interim CAO, explained that the reserve funds were used strategically to address specific needs, such as storm cleanup and the city’s green bin initiative. Good also inquired about wood-chipping expenses related to tree removal. Staff clarified that these costs were tied to storm recovery efforts earlier in the year.
Winter control expenses, meanwhile, were reported at $2 million as of the end of September, representing 76.4% of the annual budget. Staff indicated that winter weather could impact year-end results in the final quarter but do not anticipate significant variances.
