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The City of Winnipeg is crediting cost-cutting measures taken early in the pandemic for lessening its financial fallout from COVID-19.

However, with an expected deficit that reaches nearly $30 million when all city departments are factored in, and additional waves of infections still possible, clear economic challenges remain.

The city’s latest tax-supported budget shortfall is now expected to drop to $0.7 million by the end of 2020, down from $25.8 million at last check. When all departments are included, the deficit prediction reaches $29.9 million, largely due to an expected $29.1-million Winnipeg Transit loss.

The projections are based on data up to June 30, and reflect a steep pandemic drop in Transit ridership and revenue.

"The (financial) plan is working but we’re by no means out of the woods. Transit will be an ongoing concern," said Coun. Scott Gillingham (St. James), council finance chairman. "We just don’t have a clear understanding of when Transit ridership will be back up to pre-COVID levels."

Winnipeg expects its rainy day fund will be used to cover any Transit shortfall that remains at the end of the year.

The pandemic has also caused job losses, with Winnipeg’s unemployment rate reaching 11.1 per cent in July and 10.4 per cent in August, according to Statistics Canada.

Gillingham said job losses in any sector, especially the hard-hit hospitality industry, will affect the city and its taxpayers.

However, he doesn’t expect further layoffs or other major financial cuts will be needed to balance the books.

"I don’t anticipate we’re going to need to pull any additional (cost-cutting) levers in 2020," said Gillingham.

In March, the city predicted its 2020 budget would take a $78.1-million hit from the pandemic, unless that financial blueprint was altered. In the months since, the city cut costs by temporarily laying off more than 900 staff, cutting discretionary spending, temporarily reducing Transit service, freezing non-union salaries, and taking on more debt, among other measures.

The city credits the use of those "financial levers" with improving its financial outlook.

Mayor Brian Bowman said the much-improved deficit projection "demonstrates the financial competence of the city."

"What it does demonstrate is that the COVID-19 crisis cash-flow management plan that council approved earlier this year, the levers that we pulled as a result of that plan, have made a significant positive impact on our city’s bottom line," he said.

The city also revealed its next round of pandemic finance projections Wednesday.

In the best-case scenario, no additional waves of COVID-19 occur and a vaccine is available by July 2021. In that case, the GDP growth rate would be expected to drop by 5.4 per cent this fall, while the unemployment rate hits 8.9 per cent.

In the worst-case scenario, additional waves of the virus occur in both October 2020 and October 2021 and a vaccine remains unavailable throughout 2021. In that case, the GDP would be expected to fall by 5.8 per cent this fall, while the unemployment rate would hit 9.4 per cent.

Meanwhile, the city could be eligible for $40 million of new funding from the federal Safe Restart Agreement meant to assist with COVID-19 costs, which isn’t considered in the latest projections.

The city says money is not factored into the current financial outlook because it requires an agreement and some matching funds from the province, for which a formal agreement hasn’t been finalized.

— with files from Malak Abas

Twitter: @joyanne_pursaga

Joyanne Pursaga

Joyanne Pursaga

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.

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