City budget takes a beating; $57-M shortfall expected
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Massive snow-clearing costs and a series of COVID-19 financial blows are expected to result in a $56.8-million operating budget shortfall for the City of Winnipeg, along with a separate $17.2-million deficit for Winnipeg Transit.
The city’s rainy day fund is expected to largely dry up by year’s end, dropping to $14.5 million, or $57.2 million below a council-imposed minimum level, a finance report published on Friday says.
“This has been that rainy day… We had a lot of (municipal worker) overtime because of COVID. We had record levels of snow back (last winter) and (high) fuel prices… Going forward, we’ll hope for a little more stability,” said Coun. Jeff Browaty, council’s finance chairperson.
Browaty said inflation hurt municipal governments by raising the cost of delivering services.
City staff note COVID-19 costs and losses are expected to reach $53.4 million for 2022, based on financial figures up to Sept. 30.
Mother Nature has also been tough on Winnipeg’s budget. Snow and ice control is expected to exceed its $35-million budget by $40.9 million.
Meanwhile, a persistent surge in fuel prices will cost the city an extra $10.7 million.
In addition to Winnipeg Transit, the finance committee will be asked to approve budget overruns for Winnipeg water and waste and the Winnipeg Police Service.
Police are expected to face a $9.5-million deficit, in part because they managed to save about half of a $9.1-million savings target during the year, as directed by council, to help fund pension changes. The service also received less-than-expected traffic enforcement revenue.
Due to high demand for police services, WPS finances are not expected to improve in the near future, another finance report notes.
“Given the increase in the number of emergency events where there is a risk of serious bodily harm or loss of life, as well as the record high volume of homicides, and traffic fatalities, combined with the increase in major critical incidents, violent crime and calls for service, the WPS does not expect this projection to improve significantly over the remainder of the year,” it states.
A separate water and waste report seeks an additional $1 million, due to $4.6 million of extra inflation, watermain break and water infrastructure repair costs. The initial overrun is expected to be offset by $3.6 million in salary and benefit savings.
Winnipeg Transit’s expected $17.2-million projected deficit includes $6.2 million of lost revenue and $11 million in extra expenses, since ridership remained below pre-pandemic levels as fuel costs rose.
As expected, the Winnipeg Fire Paramedic Service will run a deficit, thanks largely to overtime costs.
Browaty said the combined strain could lead council to be more “cautious” in setting 2023 budget targets. He said the snow-clearing budget should also be reviewed for a potential increase.
Despite the bleak outlook, Mayor Scott Gillingham expects he won’t have to raise taxes higher than he promised during the October election.
“My full intention is to stick to my word of a 3.5 per cent (annual) property tax increase. The 2023 budget is going to be a balance between controlling costs but also investing in Winnipeg’s future,” said Gillingham.
When asked if he could rule out service cuts next year, the mayor said “it’s too soon to tell.”
Browaty noted there is cause for some optimism.
“It’s not all doom and gloom. We have seen Transit ridership numbers… generally trending up into 80 per cent of pre-pandemic levels… I’m hopeful for the longer term,” he said.
Browaty noted the federal government has promised $20.7 million in transit funding for Manitoba, most of which should be devoted to Winnipeg. However, the report notes that has not been factored into the city budget, since the money has yet to be received.
The budget losses are partly offset by savings in some city departments, including $9.5 million in cost-cutting measures taken to help cope with COVID-19.
Born and raised in Winnipeg, Joyanne loves to tell the stories of this city, especially when politics is involved. Joyanne became the city hall reporter for the Winnipeg Free Press in early 2020.