Expected $7-M city deficit nearly disappears in December to remember

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This article was published 04/03/2024 (593 days ago), so information in it may no longer be current.

Winnipeg’s financial status greatly improved at the end of last year, though considerable work remains to boost its pandemic-depleted rainy-day fund.

The city ended 2023 with a shortfall just shy of $300,000, a $6.8-million improvement during the final month of the year, based on preliminary finances up to Dec. 31. A previously predicted Winnipeg Transit deficit was replaced with a $1.3-million operating surplus.

“It is good news. It shows prudent financial controls throughout the organization,” said Coun. Jeff Browaty, chairman of finance.

Since the city often saw its finances improve during the final months of each calendar year prior to the pandemic, the rosier fiscal outlook may reflect a return to more normal conditions, said Browaty (North Kildonan).

A finance report notes millions of dollars in police savings (including lower pension costs), along with higher interest earnings, helped nearly erase the city’s overall operating deficit.

In January, the city predicted it would end 2023 with a $7.1-million deficit for its tax-supported budget, based on financial data up to Nov. 30.

The end of 2023 also saw fewer significant snowstorms than during the previous year, noted Browaty.

“We were fortunate last year. It was a below-average snow year compared to 2022, which was (a year I’ve described as) ‘snowmageddon’ before. It was a very exceptional 2022,” he said.

The city exceeded its budget for snow and ice-clearing by $4.2 million last year, compared to an over-expenditure of $52.5 million in 2022.

However, the financial hangover from COVID-19 losses must still be addressed.

By the end of 2023, only $15.7 million was left in the financial stabilization reserve, commonly referred to as the city’s rainy-day fund. That amount falls well below a $78-million council-mandated minimum.

Browaty said he does not expect the city to cut services or lay off staff to cope with that financial challenge.

“It’s still something that is of concern (but) the fact that there is some money in there is obviously positive. We are planning to allocate the settlement from the police headquarters (construction project to the reserve), once that money is realized,” he said.

In March 2023, city council approved a multimillion-dollar settlement of fraud and construction-deficiency lawsuits launched over the Winnipeg Police Service headquarters project, which will see the city receive at least $21.5 million and as much as $28 million, depending on how long it takes for the money to be paid.

“It is good news. It shows prudent financial controls throughout the organization.”– Coun. Jeff Browaty

The settlement followed a City of Winnipeg statement of claim that sought damages for alleged construction deficiencies on the project. The allegations have not been proven in court.

The headquarters opened at 245 Smith St. in June 2016, at a cost of about $214 million — well-above its original $135-million price tag. An external audit later found the project was severely mismanaged.

Browaty said the timing of settlement payments isn’t yet clear.

Meanwhile, Winnipeg Transit’s finances also improved in December. That service ended the year with a $1.3-million surplus, instead of a $900,000 loss predicted in the previous forecast.

Transit has received increased support from tax dollars in recent years, an annual contribution that is slated to rise from $102 million in 2023 to $133 million in 2027. But Browaty said its outlook is improving.

“It is encouraging that people are getting back on the bus,” he said.

The councillor expects a $6.5-million automatic fare collection system upgrade announced in the city’s recent budget should help continue to attract riders.

Final financial figures for 2023 will be released in the second quarter of 2024, following an audit.

joyanne.pursaga@freepress.mb.ca

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