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Toronto is running a $188-million surplus for the first six months of this year, a dramatic swing from the $774-million funding gap that was first projected for 2012.

The latest update on the operating budgeted was released Monday and shows increased revenues and underspending contributed to the increase of funds on hand. It estimates the city will end the year with about $115-million more than expected.

Among the many savings, a staff report finds the city had more than 1,800 unfilled positions at the end of June, about 3.5 per cent of its approved work force. Other savings included close to $3-million at the Toronto Public Library from this year's labour disruption and $10.5-million at the TTC from lower fuel costs and reduced demand for its Wheel-Trans service.

On the revenue side, the city collected $41.7-million more than expected in land transfer tax in the first half of the year. Fees for building permits were close to 60 per cent higher than expected and planning application fees also were up, both because of higher volumes.

Councillor Mike Del Grande, chair of the city's budget committee, said the new numbers do not mean the city is out of the financial woods just yet, but added it will make planning for next year's budget easier.

"You have to balance what the mayor wants and council would like to see," he said. "I don't know what we can and can't do."

Mayor Rob Ford has made it clear he wants to hold next year's residential tax increase at 1.75 per cent and also would like at some point to put an end to the land transfer tax.

Councillor Gord Perks, a frequent critic of the mayor, said the latest budget numbers, particularly the figures on staff vacancies, show the city is not delivering service at the level approved by council.

"I think there is ample evidence that Torontonians are getting less service than they are paying for," he said. "The quality of service is starting to seriously decline."

Mr. Perks gave the example of staff shortages in key departments such as planning that are holding up projects and public consultations.

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