Council given options for easing COVID-19 losses

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This article was published 12/06/2020 (2086 days ago), so information in it may no longer be current.

The city could soon borrow more money for its capital projects and draw millions of dollars from a reserve as part of an effort to temper COVID-19 losses.

A public service report calls for council to borrow $18.4 million to replace cash funding for capital projects. That’s expected to cost the city another $2 million per year in debt and finance charges, starting in 2021.

Council is also asked to take $8 million from its land operating reserve to free up cash for the overall budget.

Coun. Scott Gillingham (St. James), the chairperson of council’s finance committee, said he plans to support the measures and hopes they’ll be enough to prevent council from making more drastic cuts.

“We don’t know how long this pandemic will go. We don’t know if there’s going to be a second wave … I hope (this is) as far as we have to go but we just don’t know,” he said.

Gillingham said has repeatedly stressed that he’d like to avoid taking the most severe measures the city has outlined as options to cope with financial fallout from the pandemic, which could include reducing capital spending and seeking temporary wage reductions for all employees.

The public service also expects to increase Winnipeg’s emergency operating line of credit from $75 million to $150 million, though it doesn’t expect to actually tap into that funding.

If approved, the changes should reduce the forecasted deficit of $53.8 million for 2020 to $25.8 million, said Paul Olafson, Winnipeg’s interim chief financial officer.

Olafson noted that increased borrowing will create new costs but said it’s seen as a better option than steeper municipal cuts.

“It’s not as hurtful, in terms of still being able to carry on with our capital spending program, carrying on with the services that we’re providing,” he said.

All of the changes would require council approval.

Council will also consider providing a $7.5-million loan guarantee for Winnipeg’s convention centre, after its finances also took a substantial pandemic hit.

As soon as COVID-19 cases emerged locally in mid-March, the centre began to suffer from a “devastating” surge in event cancellations and postponements, said Drew Fisher, RBC Convention Centre’s president and chief executive officer.

“The effects of COVID-19 on the postponement and cancellation of events has been absolutely heart-breaking,” said Fisher.

He said an expected record year has been replaced with major financial losses and the loan guarantee is critical to bridging that financial gap. A city report notes all events at the RBC Convention Centre have now been cancelled or postponed until at least the fall.

The report notes the centre has already cut salaries, laid off staff and cut employee hours to reduce its losses.

Gillingham said he expects to support the loan guarantee, noting convention centres are among the hardest hit by travel and large gathering restrictions intended to reduce the spread of COVID-19.

“I have concerns for the hotel and conference industry and their immediate future,” he said.

The loan guarantee would require council approval.

Joyanne.pursaga@freepress.mb.ca

Twitter: @joyanne_pursaga