City Hall has wiped out the red ink.

Instead of a deficit, Richmond is projected to finish its most recent fiscal year with a $4.5 million surplus, according to the administration of Mayor Dwight C. Jones.

Richmond City Council received the good news Monday in a report from Dr. Jay A. Brown, budget and strategic planning director, who cited spending cuts and increased tax collections as the main reason for the change in the city’s financial picture.

The forecast was included in the administration’s fourth quarter report for the 2015-16 fiscal year, which ended June 30.

Although the figures are still preliminary and need to be audited, the prospect of a surplus is a far cry from nine months ago when Dr. Brown projected in the first quarter report that the city could finish the year with a $12.3 million deficit.

The prospect of ending the year with a surplus is both good news and bad news for Selena Cuffee-Glenn, Richmond’s chief administrative officer, and Lenora Reid, the city’s chief financial officer.

Along with other administration officials, they spent a big portion of the year complaining that the council’s shift of $9 million from city operations to Richmond Public Schools created the deficit threat.

While they can now celebrate ending the year with a better than balanced budget, the success also appears to undermine their argument.

According to Dr. Brown, the city’s financial picture changed because city departments identified savings and efficiencies that allowed them to curb expenditures and because of the efforts of the Finance Department in collecting revenues.

One example: Collection of personal property taxes is poised to finish at $57.7 million, according to the financial report, a jump of $3.3 million, or 6 percent, from the budgeted projection of $54 million.

Collections of delinquent taxes also have increased dramatically. For example, the city believes it will gain an extra $2.2 million in collection of penalties and interest on delinquent business taxes, a 40 percent increase from the projected income included in the budget the council approved in May 2015.

Overall, tax collections are projected to finish $10.1 million ahead of budgeted expectations, more than offsetting a $7.36 million decline in other types of revenue, including state funding, according to the report.

That extra revenue, coupled with lower than anticipated spending by departments, created the surplus.

For example, the Police Department reported finishing the year with $680,946 in unspent funds, somewhat surprising given Police Chief Alfred Durham’s complaint that he needs more money to hire extra police officers.

The Fire Department, which also has complained about overtime funding, is expected to finish with $557,000 in unspent funds.

While Public Works overspent its budget by $2.3 million in dealing with the costs of winter and early summer storms, Economic and Community Development finished the year with $1.27 million in unspent funds, or 25 percent of its budget.

And the Department of Information Technology finished the year with $1.5 million in unspent funds.