City mulls future of its ‘rainy day’ fund

The City of Winnipeg could soon set less cash aside to cover a rainy day.

For years, a city council-imposed target has required a minimum balance for the financial stabilization reserve, also known as the rainy day fund. That threshold is equal to six per cent of the city’s tax-supported operating expenses each year. The amount was set at $85 million in 2025.

Following the economic blows of the COVID-19 pandemic, however, the fund has fallen far below the target in each of the last four years, triggering steps to replenish it.

At a recent executive policy committee meeting, city finance officials said staffers are examining whether the minimum balance should be reduced.

“As part of the budget process, we want to look at what is the right … target. It’s been a while since we’ve looked at that,” said Tracy Graham, the city’s chief financial officer. “Six per cent might not be the right number for the city.”

Mayor Scott Gillingham said he’s open to considering a change but city council must closely scrutinize any proposal to reduce the amount.

“It’s certainly too soon for me to say that I support lowering the threshold,” said Gillingham.

The mayor said the rainy day fund played a critical role in helping the city cover its pandemic losses, after revenue from parking, transit, hotel taxes and other departments plummeted.

“It was devastating in so many ways. And our rainy day fund went from over a $100-million balance almost to … completely depleted,” said Gillingham. “A strong rainy day fund enabled the city to withstand the attack of COVID-19.”

However, the city continues to cope with a tight budget, partly due to high inflation, and should consider whether current targets for the fund should be maintained, he said.

“One of the advantages I could see (of reducing the minimum target) is that it would take some of the pressure off the City of Winnipeg to make sure we have a balance of over $85 million to $90 million in a … ‘just in case’ fund. It would free up some of those funds … (for) enhancing service delivery,” said Gillingham.

The mayor spoke on the topic Thursday, the same day city council approved a plan to boost the fund. The city will divert $15 million from the accelerated regional street renewal program and $3.4 million from a Southwest Rapid Transitway reserve to top it up.

The mayor said the roads budget transfer won’t eliminate any street repairs.

“There’s no loss of funds for roads. All roads that were contemplated in the … accelerated roads plan (will be) completed,” said Gillingham.

The mayor said part of the $28-million settlement headed to the city for fraud and construction deficiency lawsuits related to the police headquarters project may be used to boost the rainy day fund.

While $22.5 million of the settlement is earmarked to balance past budget gaps, $5.5 million is still available.

Gillingham said city finance officials will provide recommendations on how best to spend the remaining money.

The financial stabilization reserve had a balance of about $26 million at the end of 2025, despite that year’s $85-million target. After the new transfers, the fund is expected to reach $44.2 million by the end of this year.

joyanne.pursaga@freepress.mb.ca

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