City in new territory without reserve fund to cover expected deficit: finance committee chair
The City of Winnipeg may need to find millions of dollars in next year’s budget to cover overspending after its latest financial report shows the forecast deficit for this year has grown.
The city estimates its deficit for this year will be $23.4 million, an increase of more $4.2 million from the last financial forecast, in June.
The city has repeatedly drawn from its fiscal stabilization reserve to balance the budget over the last few years, meaning there is nothing there to help this time.
Finance committee chair Coun. Jeff Browaty told reporters he’s never seen the reserve fund drop to zero in his 18 years on city council, and this is “new territory” for the city.
“Over the last number of years, we’ve taken a fair number of risks, by underfunding things like snow clearing, by overestimating Transit revenues,” Browaty said.
“Unfortunately, those things have come home to roost, and we’re in a difficult situation right now.”
A report to the finance committee recommends cancelling a planned transfer to the reserve fund, giving it $14.3 million to partially offset the estimated shortfall, and leaving $9.1 million to cover.
Reasons for the deficit include rising costs for emergency services and public works and lower-than-expected revenue in the property and planning department.
The Winnipeg Fire Paramedic Service expects to overspend its budget by $13.1 million, mainly due to overtime and Workers Compensation costs.
The police service says it needs another $2.2 million, after falling short of its $7-million savings target set by council.
The public works department forecasts a shortfall of $13 million, mainly due to increased snow removal and ice control costs, spring and neighbourhood cleaning, and road construction and maintenance.
The planning, property and development department expects a $5-million deficit because of lower revenues, in part due to decreased permits.
The city is also allocating more money to a reserve account used to cover expected costs related to property tax assessment appeals from the Manitoba Municipal Board and the Court of King’s Bench. A report says the city needs to add $2.8 million each year over three years, starting in 2024. This year’s allocation will be offset by salary savings and increased revenue, leaving a shortfall of $780,000 for this year.
The city is legally required to table a balance budget every year, meaning any shortfall at the end of the year must be accounted for in the next year’s budget.
In a news conference, Mayor Scott Gillingham would not say whether he planned to maintain the 3.5 per cent property tax increase he committed to in the last civic election.
He said the latest budget update underscores the need for a new funding agreement between the city and the provincial government.
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