Rising energy costs, a downturn in development and residents choosing not to spend their cash on vending machine chocolate bars all appear to be taking a toll on the city's coffers.

That's according to a report presented at Monday evening's city council meeting.

Rob Fendrick, the city's director of corporate services, presented council with the third-quarter budget variance report. It lets the city know how close to budget it expects to be by year-end.

And in this case, its expenses could come in nearly $60,000 over the revenue it's bringing in.

As Fendrick reported, while expenses are expected to be under budget by about $2.7 million, revenues are coming in much less than anticipated, at about $2.6 million under-budget.

"In summary, at a high level, a potential surplus from labour vacancies and propane is being offset by other energy costs, legal fees, compost operations and lower revenues across the board on a number of small accounts, but primarily stemming from reduced development activity and lower bylaw services revenues,” Fendrick stated in presenting the report to council.

Addressing council, Fendrick noted electric bills represent a large and rising cost to the city.

In total, energy costs are expected to be $417,961 over-budget with the higher costs of gas, oil, diesel and electrical costs rising.

Propane costs that are projected to be under-budget by $301,156 are offsetting the mounting energy costs.

Other expenses that aren't in line with original budget projections include:

• unfilled vacancies making wages and benefits approximately $1.5 million below-budget;

• projections for advertising being below-budget by $52,974 due to a centralization of advertising;

• legal fees being over-budget by $184,433 due to contract disputes and human resource issues;

• other services are expected to be over-budget for the landfill operation as a result of the compost contract, though the contract results in an "off-set” in salaries at the landfill being lower than expected; and

• there are talks underway with the territory on the possibility of recovering money to offset some of the costs that have come with providing water and sewage services to Whistle Bend.

Fendrick explained there has been a cost of providing services to Whistle Bend, which has few residents.

If negotiations with the territory result in the $58,000 the city is seeking, Coun. Jocelyn Curteanu pointed out, it would nearly balance the budget, with the deficit projected at $58,265.

On the revenue side, the variances from the budget include:

• fewer land sales than expected, including at the former Motorways trucking site downtown;

• development activity in Whistle Bend being lower than expected, resulting in the expected development and zoning fees being down as well as building and plumbing permit revenue;

• various other revenue avenues also being down, including development cost charges, investment income and Canada Games Centre vending machine revenue;

• staff shortages in the bylaw department have resulted in fewer parking meter fines;

• program fees and space rentals at recreation facilities are down; and

• grants are lower than expected due to a timing delay.

Fendrick pointed out as well that the final quarter report will be prepared in December, which will give the city a better sense of the year.

"As part of the third quarter variance process, managers were asked to also review their planned capital spending,” he noted in the report.

"A number of projects have been identified as complete, which will allow for funds to be returned to the city's reserve in preparation for the 2014 budget.

"The finance department is confirming project statuses and funding sources and will be bringing forward another report to council to make any necessary budget amendments.”

It's expected the 2014 capital budget – outlining major projects for next year – will come forward for first reading at the Dec. 12 council meeting and be adopted early in the new year.

The city's operating budget typically comes forward following the adoption of the capital budget.