City estimates $53.9-M first-quarter deficit

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This article was published 07/06/2022 (1271 days ago), so information in it may no longer be current.

A string of massive snowstorms and a global pandemic have combined to ravage the City of Winnipeg’s bottom line.

The city now expects to end 2022 with a tax-supported deficit of $53.9 million, plus a $10.5-million Winnipeg Transit shortfall, based on financial data up to March 31.

While the fiscal outlook tends to improve later in the calendar year, finance officials warn this expected shortfall more than doubles the largest one recorded at the same point during the past five years (a $25.8-million deficit once expected for 2020).

“There’s a little bit of a perfect storm, where all these problems are coming at us right now,” said Coun. Jeff Browaty, head of council’s finance committee. “Without a doubt, this is a bigger first-quarter deficit than we normally see.”

A finance report notes the largest deficit falls within the public works department, which expects a $33.1-million budget shortfall, primarily due to snow-clearing overruns.

Police expect to exceed their budget by $10.9 million, thanks to reduced traffic fine revenue and an unrealized council-directed savings target. The Winnipeg Fire Paramedic Service expects to fall $7.5 million short, largely due to increased overtime, salary and benefit costs, much of which has been linked to the COVID-19 pandemic.

Browaty said the higher emergency service costs are concerning but likely unavoidable, especially after the pandemic fuelled major staffing shortages earlier this year.

“It’s been a pretty unprecedented first quarter. We had impacts from COVID, including additional absenteeism for the fire paramedic service and police,” he said.

Lost revenues created additional losses for the planning, property and development department. Transit ridership continues to hover around 48 per cent of pre-pandemic levels.

Council will be asked to approve new “crisis cash-flow management” steps to reduce the shortfall. If approved, the city will reduce a transfer to animal services from general revenues by up to $400,000. It would also divert an extra $2 million from Winnipeg Parking Authority revenues and drain an extra $900,000 from water and waste to cover other costs.

The city would also transfer an extra $2.5 million from its insurance and workers compensation reserve funds to general revenues, and eliminate solid waste tipping fees charged to civic departments for the rest of 2022.

Plans were already in place to defer a $1-million transfer to provide community centre renovation grants.

Browaty said he doesn’t expect council will resort to steeper cuts, such as layoffs or reduced services, though that could be considered next year.

“In terms of doing something radically different in (this budget) year, we’re not there at the moment, but the next council’s certainly going to have to make some tough choices,” he said.

Some senior government funding could help bridge the financial gap. The province has committed $8.9 million for Winnipeg to fill potholes and make other road repairs, which the city expects to receive soon, said Browaty.

The federal government has also promised to provide Manitoba $20.7 million to reduce public transit shortfalls, but Winnipeg does not have that funding in place yet either.

Any deficit the city can’t eliminate by the end of the year will be covered through a transfer from its financial stabilization reserve.

However, the report notes the so-called “rainy day fund” is currently on track to plummet to $29.2 million, well below its $71.2-million council-imposed minimum. Council would then be required to seek options to restore the fund.

Inflation could create up to $5 million of additional costs for the city, the report notes. Finance officials predict Winnipeg can absorb those costs in its existing budget.

joyanne.pursaga@freepress.mb.ca

Twitter: @joyanne_pursaga