KITCHENER — For the second year in a row, the City of Kitchener has posted a modest surplus, after almost a decade of running deficits.

The 2016 budget for tax-supported operations — municipal operations paid for out of property taxes — ended with a surplus of $941,000, a modest amount of black ink representing 0.6 per cent of budgeted expenses of more than $169 million.

Finance committee chair Coun. Scott Davey said the surplus was welcome news, coming on top of last year's surplus of just under $1 million. "It shows that it wasn't a fluke."

The surplus was transferred into the city's tax stabilization reserve fund, a rainy-day fund that is meant to be drawn on to prevent sudden, sharp jumps in property taxes from one year to the next. The fund now stands at almost $2.4 million, still well below its minimum target of $5.6 million, said Dan Chapman, Kitchener's deputy chief administrator for finance.

The city has a policy of transferring any surplus into the fund, and drawing from it if it faces unexpected costs such as a severe winter that pushes up snow removal costs.

Once the fund gets closer to its target, or if the surpluses start to grow, Davey said he'd be in favour of having the surplus returned to taxpayers. "We're likely a couple years away from realizing that, but we're going in the right direction," he said.

In theory, revenue and expenses should exactly match at year's end, but in reality that is almost impossible to achieve, Davey said. But the city ran deficits, averaging around $500,000, from 2007-2014, mostly because of overly optimistic projected revenue from things like bylaw fines and underestimating the cost of things like hydro and postage.