TAMRMS#: B06
4.2
REQUEST FOR DECISION
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Preliminary Year End Surplus & Reserve Transfer
Presented by: Stanley Chan, Manager of Financial Operations and Reporting, Finance and Strategic Services
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RECOMMENDED MOTION(S)
recommendation
That the 2025 Municipal operating surplus, estimated to be $3,560,569, be allocated as follows: $1 Million to the Stabilization reserve and the remaining balance to the Capital Reserve.
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SUMMARY
The purpose of this report is to bring forward the City’s 2025 preliminary year end position, and to make a recommendation for disposition of the operating surplus.
ALIGNMENT TO COUNCIL DIRECTION OR MANDATORY STATUTORY PROVISION
Annual audited financial statements are required to be submitted to Municipal affairs by May 1st of each year.
BACKGROUND AND DISCUSSION
Administration is currently finalizing the 2025 financial statements. Upon completion of the audit, the final 2025 financial statements will be presented to Council for review and approval on April 17, 2026, with a complete explanation of the financial results.
Based on preliminary review, Administration anticipates reporting a municipal operating surplus of approximately $3,560,569, which is 1.46% of the 2025 approved budget.
2025 Preliminary Operating Surplus $3,500,000
2025 Municipal Operating Budget $240,133,200
Over the next several weeks, there will be some adjusting entries that may impact the final operating position. The surplus is reflective of all carryforwards being requested for approval by Council. These adjustments will be finalized as accounting cut-off dates are realized and further direction regarding various issues is received from the Auditors. Further details of the City’s year end position are provided in the 4th Quarter Report, which is being presented concurrently with this report.
In the past, surplus funds have been transferred to either the Stabilization Reserve or Capital Reserve.
10% of the 2025 Municipal Operating Budget $24,013,320
With a 2025 Stabilization Reserve ceiling of $24,133,320, allocating $1 million will grow the reserve and strengthen the municipality’s financial resilience by supporting a healthier balance and helping to fund the $960,000 in approved 2026 projects supported by the Stabilization Reserve.
Stabilization Reserve
December 31, 2025, uncommitted balance (pre-surplus) $9,841,796
Less: 2026 approved projects ($960,000)
Recommended Transfer from the 2025 Operating Surplus $1,000,000
Ending Balance including Surplus $9,881,796
Allocating the remaining $3.5 million surplus to the Capital Reserve will help replenish the reserve thereby, supporting the municipality’s ability to deliver future capital projects. Overall, this allocation contributes significantly to long-term capital sustainability and the municipality’s capacity to maintain service levels through timely investment in its infrastructure.
Capital Reserve
December 31, 2025, uncommitted balance (pre-surplus) $2,443,776
Recommended Transfer of 2025 Surplus $2,560,559
Ending Balance including Surplus $5,004,335
STAKEHOLDER COMMUNICATIONS OR ENGAGEMENT
N/A
IMPACTS OF RECOMMENDATION(S)
Financial:
The establishment and funding of reserves is a financial strategy intended to provide for emergent financial needs, stabilize tax rates, and to set aside funds for the replacement of existing equipment, facilities, and future projects. While some reserves have dedicated ongoing funding mechanisms, others do not. Allocation of the 2025 operating surplus to the recommended reserves provides a one-time increase for future use.
Compliance & Legal:
None at this time
Program or Service:
H.1.2 Corporate Reporting
Corporate reporting process to Council and the community to maintain transparency to the community through regular reporting of the City's achievements. It helps monitor and report on results against plans, including strategic plans, long-term plans, business plans and budgets.
Organizational:
None at this time
Risks
None at this time
IMPACTS OF ALTERNATIVES CONSIDERED
If Council does not wish to support the recommendation, the following alternatives could be considered:
ALTERNATIVE 1: Transfer all the surplus funds to another reserve
In order to meet our audit timelines and Financial Statement submission deadlines with Municipal Affairs, a final decision on operating surplus transfers must be made at the February 17, 2026 Special Council meeting.
Financial:
The surplus funds would increase the balance of another reserve.
Compliance & Legal:
None at this time
Program or Service:
H.1.2 Corporate Reporting
Corporate reporting process to Council and the community to maintain transparency to the community through regular reporting of the City's achievements. It helps monitor and report on results against plans, including strategic plans, long-term plans, business plans and budgets.
Organizational:
None at this time
Risks
None at this time
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Report Date: February 17, 2026
Author(s): Stanley Chan
Department: Finance & Strategic Services
Department Director: Anne Victoor
Managing Director: Diane McMordie
Chief Administrative Officer: William Fletcher