The city is headed toward a small deficit by the year-end if current financial statements are any indication.

At Monday evening's city council standing committee meeting, financial services manager Valerie Anderson presented council with the second quarter variance reports showing a possible year-end deficit of $86,000.

The figure represents less than one per cent of the $49-million operating budget.

As Anderson noted in her report to council though, with most of the city's projects happening through the summer months, it's expected officials will have a better idea of where it will be by the end of this month.

There are a number of revenue and expenditure variances that combine to make up the projected deficit.

Among the major differences in the budget at more than $50,000 are:

• Higher costs in parks and recreation due largely to loftier fuel and propane costs. That's offset somewhat by higher revenues to the department of a little more than $162,000 over its $2.6-million budget, coming from things like more pass sales at the Canada Games Centre;

• Developments are expected to bring an increase in revenue to the planning department with revenues exceeding the budget by just less than $79,000 while expenses will be close to the $708,900 budget; and

• Public works will see revenues jump by more than $90,000 due to higher than projected tipping and garbage collection fees. Expenses are expected to stay close to the $7-million original budget.

"As noted by our auditors in the last two annual audits, our payroll accruals were not adequate to address future benefit costs," reads the administrative report.

"Financial services is in the process of obtaining an actuarial proposal to review 2008 payroll accruals, and has made a preliminary estimate that an additional $100,000 in accruals will need to be allocated to the various departments.

"This estimate is a very conservative one, and will be confirmed prior to year-end by the actuaries."

Financial services has a 2008 budget of $36.2 million.

The city's human resources department is expecting that, among other issues, legal fees from labour relations could lead to the department going over its original $622,478 budget by about $56,408 by year-end.