Winnipeg headed for COVID-19 cash crunch

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This article was published 02/04/2020 (2023 days ago), so information in it may no longer be current.

The City of Winnipeg shared a grim financial forecast Thursday, predicting multimillion-dollar losses linked to the COVID-19 pandemic.

A public service report states that Winnipeg Transit alone expects to lose $9.7 million, if changes caused by the pandemic conclude by April 30. If that doesn’t occur until July 31, the loss could jump to $27.9 million.

With Manitoba’s public schools now closed indefinitely due to the pandemic, it’s difficult to predict a realistic timeline for when businesses, governments and the public could return to normal.

Overall, the city projects a total budget shortfall of $32.7 million in the April 30 scenario, which soars to $73.2 million in the July 31 model.

Coun. Scott Gillingham (St. James), the city’s finance chairman, said Transit losses have become clear after Winnipeggers were urged to stay home as much as possible to reduce the pandemic’s spread.

“Transit is still a critical service for people that still have to go to work, (but) right now our ridership is down. I believe it’s 10 per cent to 20 per cent of normal ridership, so revenues are down,” said Gillingham.

While the city currently has $107.8 million in its financial stabilization reserve, it predicts that could fall to $90 million if pandemic changes last until April 30, or $52.5 million if they last until July 31.

That means the longer pandemic timeline could force the reserve to fall below a minimum threshold set by council policy, which requires the fund’s 2020 balance to be at least $68.6 million.

If the reserve falls below that council-imposed floor, the city could consider asking the province to defer school tax payments, drawing on a line of credit, taking on more debt, reducing capital spending, cutting services and/or laying off staff, among other measures, according to a city report.

“All those options and more need to be considered during this time,” said Gillingham.

The public service report also notes that municipal departments have been told to immediately cut spending, due to these financial concerns.

“All expenditures should be reviewed to determine what can be halted without impacting current service delivery or collective agreements,” the report states.

The financial losses are expected to come through multiple city departments, including an expected drop in both permit applications and traffic-enforcement revenues, said Paul Olafson, the city’s interim chief financial officer.

The report says the financial impact of a recent arbitration decision on the Winnipeg Police Service pension plan is also now being reviewed. The arbitrator ruled against the city’s plan to alter the pension plan to seek annual savings, a ruling the city expects will erase about $6 million of savings in 2020.

The city is still assessing how to respond to the ruling itself, Gillingham said.

Today, council is set to discuss the financial report and vote on declaring a possible state of emergency due to the COVID-19 pandemic.

joyanne.pursaga@freepress.mb.ca

Twitter: @joyanne_pursaga