City’s $23-M shortfall could extend into 2025

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This article was published 21/11/2024 (292 days ago), so information in it may no longer be current.

The City of Winnipeg’s 2024 financial woes have become so critical that they are expected to strain next year’s budget, too, for the first time in recent history — a grim reality the mayor says cannot be ignored by the provincial government.

“We need more revenue for the City of Winnipeg,” Scott Gillingham said, as he repeated his call for a new funding model from the province that includes some form of growth revenue.

The city predicts it will end this year with a $23.4-million deficit in its tax-supported operating budget. If council approves, $14.3 million will be transferred from the city’s financial stabilization reserve to cover the deficit, with finance officials predicting the fund will be reduced to zero by year’s end.

If the outlook doesn’t improve, the remaining $9.1-million shortfall will be covered in next year’s budget.

“I have not seen this in the 10 years that I’ve been here (at city council)… The first item, really, of business in the 2025 budget would be to deal with any shortfall in 2024,” said Gillingham.

The deficit has grown by about $4.2 million since a previous finance report, which was based on data up to June 30. The latest financial forecast is based on data up to Sept. 30.

Gillingham said although the city is facing a “very difficult” budget process for 2025, he isn’t considering service cuts to bridge the gap among the “difficult decisions” ahead for next year’s budget, nor does he expect to cut staff.

“I’m not looking at layoffs at this point,” said Gillingham.

Earlier this month, a city-commissioned poll asked Winnipeggers if they would support a new municipal tax, which would require provincial approval.

Some of the items considered for a new tax were: alcohol, online deliveries, vehicle registration, vacant homes, commercial parking and land transfers. Results of the survey have yet to be released.

Premier Wab Kinew has said the province would listen to any city requests but has made no promises on any revamped funding formula.

A September finance report noted the city would reduce discretionary spending and implement a hiring pause for non-essential staff to cut costs.

When asked if the mayor would raise property taxes at a higher rate next year than the 3.5 per cent annual hike he promised during his campaign, he did not directly answer.

“I don’t think there’s been a situation that’s quite as dire as this. COVID was certainly part of it.”–Coun. Jeff Browaty

“The details of the budget will come forward in the coming weeks,” he said.

Coun. Jeff Browaty (North Kildonan), who serves as council’s finance chairman, said this budget is among the most difficult he’s dealt with since first being elected in 2006.

“I don’t think there’s been a situation that’s quite as dire as this. COVID was certainly part of it,” said Browaty.

Service cuts aren’t the answer to balance the books, he said.

“At this point, there (are) services Winnipeggers count on, that I think are untouchable,” said Browaty.

A finance report blames the recent deficit increase on property and development revenue that raised $5.1 million less than expected this year, an increase in tax appeal losses, and challenges in departments achieving in-year savings targets.

The city also missed out on $3.7 million of revenue due to delays in implementing a planned 911 fee.

The bulk of the deficit reflects an expected $13.1-million Winnipeg Fire Paramedic Service shortfall, primarily linked to workers’ compensation and overtime costs. Another $13-million loss is expected for public works due to increased snow clearing, spring cleaning and road construction costs.

The losses are offset by higher interest earnings and other city savings.

The head of the city’s largest union said he doesn’t expect layoffs would be possible to bridge the budget gap.

“(While) that’s always a concern, I think right now the city’s basically working on a skeleton crew, not able to provide many of the services that they’re required to provide. I don’t know that there’s really room for cuts anywhere without providing significant disruption in service levels,” said Gord Delbridge, president of the Canadian Union of Public Employees Local 500.

Delbridge said he’d like to see the city consider providing more services with its own staff, such as some garbage collection, to ramp up competition with the private sector. He said private contract prices have surged higher in recent years but the city currently has no alternative to paying the market rate.

“In order to remain competitive, you can’t be beholden to a private, profit-driven contractor,” said Delbridge. “The increased cost (of private contracts is) so significant they have to react and bring some of this work back in-house.”

Council’s finance committee will discuss the update on Nov. 27.

joyanne.pursaga@freepress.mb.ca

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