Mayor makes good on campaign vow to raise property tax, impose frontage fee ‘There won’t be any surprises’ in Wednesday’s draft budget, Gillingham says; city drains most of rainy-day fund to cover record operating deficit
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Winnipeggers can expect property tax and frontage levy increases in the city’s proposed 2023 budget Wednesday, while the rainy-day fund is nearly drained to cover what is likely the largest-ever deficit.
Scott Gillingham’s first budget as mayor is set to follow through on his major election promises, including tax and levy hikes designed to collect an additional $42 million from property owners for roads, transit and other services.
“The 2023 budget will reflect a lot of what I committed to doing through my campaign,” said the mayor, who’s been in office for more than 100 days as of last week. “There won’t be any surprises in the budget.”
Before last October’s vote, Gillingham pledged to raise property taxes by 3.5 per cent annually between 2023 and 2026, and impose a one-time frontage levy increase of $1.50 per foot, equivalent to a 2.6 per cent tax hike.
While he wouldn’t give any secrets away, he indicated the draft budget also will reflect council priorities and seek to address some of the shortfall, while the city is squeezed by COVID-19 pandemic losses, snow-removal costs and inflation.
Finance chair Coun. Jeff Browaty, who is presenting his first budget, noted 2023’s spending blueprint is the last in the current four-year planning process.
“I think it would be reasonable to assume we’re going to stay reasonably close to what was in the multi-year budget,” said Browaty (North Kildonan).
Property tax increases were capped at 2.33 per cent the previous three years.
When he ran for mayor, Gillingham promised to provide more support for people experiencing homelessness in Manitoba’s capital.
He also pledged to hold the police budget at or below the inflation rate, and set up a Winnipeg Transit security force, while identifying crime prevention as one of the priorities of his four-year term.
The candidate’s other promises included widening Kenaston Boulevard, expanding Chief Peguis Trail and reducing 311 wait times in a growing city of about 750,000 people.
Final draft budget preparations were overshadowed by Tuesday’s announcement of an $83 million operating deficit in 2022, largely due to lost revenues and extra costs associated with the pandemic, and extremely high expenses for snow and ice clearing.
City staff confirmed to Browaty the deficit is the largest in 20 years and, most likely, ever.
“As far as we know, in recent times this is a record,” he said.
To offset the shortfall, the city is dipping into its financial stabilization reserve fund — or rainy-day fund — leaving a precariously low balance of just $5.3 million as of Dec. 31.
The balance is $66.4 million lower than the minimum mandated by council, according to a year-end financial report.
The balance must be six per cent of the annual operating budget, which was set at $1.2 billion in 2022. The city has exceeded the budget by almost seven per cent.
In July, a finance report predicted the reserve would be $30 million at end of 2022. The fund held $75.1 million in December 2021.
Gillingham and Browaty said a plan to top up the fund will be presented with the preliminary budget.
They said the fund did its job while the city navigated an emergency such as the pandemic and unusually high levels of snow.
“It’s there to draw on in case of unforeseen circumstances. Now, it’s time to replenish it,” the mayor said.
“It’s there to draw on in case of unforeseen circumstances. Now, it’s time to replenish it.”–Mayor Scott Gillingham
Last year was like a “perfect storm,” said Browaty, pointing to the Omicron wave of the pandemic and heavy snowfalls occurring in the early months.
The city incurred a $52.5 million overrun for snow and ice removal, including $8.4 million in overspending in December.
The city’s COVID-related shortfall was almost $54 million — $12 million more than expected and largely due to lower Transit revenue.
Annual ridership was about 31 per cent less than normal levels, while Transit operated a reduced service.
Passenger numbers have been steadily increasing since May, after recovery was slower than expected in early 2022.
For Browaty, it’s a sign COVID-19 impacts are lessening.
“I think it would be reasonable to assume we’re going to stay reasonably close to what was in the multi-year budget.”–Coun. Jeff Browaty
Transit expects to cover its $5 million deficit for 2022 with retained earnings. The department’s shortfall was reduced thanks to $19.4 million in federal funding via the province, with $9 million set aside for 2022 and the rest for 2023, the city said in a news release.
Parking revenue also has not returned to previous levels, Browaty noted.
COVID-19 impacts were also felt within the Winnipeg Fire Paramedic Service.
Shared Health is covering $3.8 million in additional EMS costs, while $3.2 million in fire-related expenses, including overtime linked to illness and staff shortages, cannot be recovered, according to the finance report.
In December, the finance committee approved a Winnipeg Police Service request to spend $4.3 million beyond its 2022 budget.
Winnipeg is also feeling pressure from inflationary cost increases, said Browaty.
The city overspent its fuel budget by almost $11 million due to a surge in prices.
The draft capital and operating budgets will go before city hall committees and the Winnipeg Police Board to hear from delegates and consider changes before council holds a final vote March 22.
As a general assignment reporter, Chris covers a little bit of everything for the Free Press.