City administration is applauding obedient city staff for reducing the city's projected deficit from $304,655 to $31,000.

Valerie Anderson, the city's financial manager, read city council the third quarter variance report at Monday evening's standing committee meeting.

'On the expense side, most departments showed significant improvement from the second quarter variance in lowering the projected deficit,' she said, reading from a prepared statement.

Last August, Anderson announced the city was facing a projected $304,655-deficit at year's end . Mayor Bev Buckway asked all departments to effectively tighten their purse strings and reduce erroneous or extra spending.

Speaking to the Star after last night's meeting, Anderson said the 90 per cent deficit reduction is really as simple as that.

'Also, city purchases don't always fall in a 12-week cycle,' said city manager Dennis Shewfelt.

For example, the gravel the city uses on the roads during the winter is purchased in the spring, he said.

The third of four quarter variance report gives a much more accurate view of city finance balances, Shewfelt said, because city spending and revenue patterns begin to even out.

The third quarter variance report comes out a week before city council releases its 2008 operating budget.

There was earlier speculation that a $300,000-range deficit at year's end would result in heightened property taxes.

Following Monday's meeting, no city staffers were willing to let the cat out of the bag and hint how the projected $31,000-deficit would affect property taxes.

Buckway was visibly pleased at the announcement, commenting afterwards with a smile, 'Isn't that something?'

Anderson explained to council the reasons for the $31,000-projected deficit that accounted for variances of $50,000 or more.

She said financial services is responsible for the bulk of the city's surplus, projected to bring in $410,000 more than expected.

Primarily, higher than projected investment income and general tax revenue are responsible. Increased development in the city is slated to bring in an extra $118,700 in planning and building inspection revenue as well.

'This will help offset any overages on the expense side,' she said.

On the minus side, the most significant variance comes from the parks and recreation department, which is expected to be $420,000 over-budget at year's end, said Anderson.

This is largely due to an overage in wages, 'some of which were incurred during the Canada Winter Games,' she said. They were held in Whitehorse last February and March.

Coun. Dave Stockdale asked administration if they could provide council with a breakdown of what overages are a result of the Games, and which are a result of the Canada Games Centre's operations. Administration confirmed this could be provided.

The city has also seen an increase in funerals that was not expected, which meant a large number of inventory vaults needed to be purchased, although the cost for those will be offset in 2008 when they are sold, said Anderson.

The maintenance and safety department is still forecast to produce a $54,000-overage, although this is lower than the $235,000-overage predicted in the last variance report.

While a $31,000-deficit is good news compared to a projected $304,655-shortfall, Anderson said at year's end, the city must not have any deficit at all.

'If a balanced budget cannot be achieved, the contingency fund will be drawn down to make up the difference,' she said.

The city's contingency fund is a rainy-day account of sorts, meant to be used only in unforeseen, emergency-type situations.