The City of Terrace ended 2025 with a $ 2.48 million operating surplus, with the additional funds being directed toward future capital projects.
According to a report presented to Terrace council, the city’s General Fund recorded a surplus of $2,483,621 last year. The surplus came from several budget variances, including higher interest revenue, lower spending and additional revenues.
The largest contributor was a $580,000 increase in net interest revenue after transfers to reserve funds.
The city also saved approximately $450,000 in its solid waste function after an amended landfill closure plan reduced the scope of work. The city determined that $350,000 of its landfill liability funding was no longer required, returning that amount to the General Fund surplus.
Other factors included approximately $260,000 in Public Works savings, largely because winter road maintenance costs were lower than budgeted during a mild winter. Administration also came in about $225,000 under budget, primarily due to vacant positions and consulting services.
The city received another $145,000 from WorkSafeBC following the successful re-evaluation of previous claims. Pool and arena revenues were also $130,000 higher than budgeted.
Development Services recorded a $298,000 favourable variance, driven by higher building permit revenues and vacant planning positions. Another $361,000 variance came from RCMP lease revenue, salaries and a negotiated IT services contract that resulted in one year of services without a charge.
Council approved transferring $2,899,525 from the General Fund’s accumulated surplus into the General Capital Works Reserve.
The city’s accumulated General Fund surplus stood at approximately $8.4 million. Under the city’s Reserve and Surplus Policy, the target balance is $5.5 million, based on approximately two months of budgeted General Fund operating expenditures for 2026.
That left nearly $2.9 million considered excess and available for transfer.
The money will be held in the General Capital Works Reserve, which is intended to help fund major capital projects and reduce the city’s future reliance on borrowing for infrastructure investments.
Council also approved transferring $164,450 from the Water Fund accumulated surplus into the Water Capital Reserve. The Water Fund ended 2025 with a $97,035 operating surplus, while its accumulated surplus was above the city’s target level.
The Sewer Fund recorded a much smaller operating surplus of $1,659, and no transfer was recommended because its accumulated surplus remained within the city’s target range.
The city’s Reserve and Surplus Policy states that excess funds should be directed toward future capital expenditures or one-time expenses rather than being used to reduce recurring taxation or cover ongoing operating costs.
The transfers require an amendment to the city’s 2026 Financial Plan.
