City ends 2021 with $22.3-M shortfall

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This article was published 08/02/2022 (954 days ago), so information in it may no longer be current.

The COVID-19 pandemic delivered a massive blow to the City of Winnipeg’s 2021 budget and the municipal tab is expected to keep climbing this year.

The city ended last year with a $22.3-million operating budget shortfall, plus a separate $3-million deficit for Winnipeg Transit, according to unaudited financial figures up to Dec. 31, 2021.

While it budgeted for the pandemic to create $61.2 million in extra costs and lost revenues for 2021 (compared to previous multiyear 2020-23 budget estimates), the total impact reached about $73 million.

When this year’s financial hit is included, the city expects COVID-19 will have a combined $206.6-million impact over the 2020, 2021 and 2022 budgets.

“(The) $206.6 million is a significant shock to the city (budgets) and the city could be in much worse position had we not adopted the multiyear balanced budget and a crisis cash flow management plan. The multi-year balanced budget has helped us weather the difficult financial storm that the pandemic has placed the city in,” Coun. Scott Gillingham, finance committee chairman, said Tuesday.

A finance report warns the latest wave of COVID-19 infections shows the financial threat isn’t over.

“The Omicron variant is very transmissible and has resulted in new public health orders to mitigate this. The operational and financial impacts of this variant are emerging and evolving and are being closely monitored,” the report notes.

Gillingham said he expects an update on potential “crisis cash flow” measures the city could use to cut its losses within the next few weeks. Earlier in the pandemic, those measures included temporary layoffs and service cuts. The councillor said it’s not clear if either of those steps will be needed again.

For 2021, the most significant pandemic costs included plummeting Transit revenues, as Winnipeggers stayed home more often. Winnipeg Transit ridership is still hovering around 48 per cent of normal levels, the report notes.

The Winnipeg Fire Paramedic Service is facing soaring overtime costs, after a higher-than-expected number of retirements, a switch to smaller, socially distanced recruit classes, and a recent Omicron-related staff shortage.

The WFPS is asking the finance committee to approve its second budget overrun for 2021, an extra $2.2 million that would bring its total budget over-expenditure to about $5.6 million.

Since the city must balance its budget every year, the 2021 deficit will be covered through a financial stabilization reserve. Gillingham said that payment will leave the so-called “rainy day fund” with $75.1 million, about $4 million above a council-imposed minimum balance of $70.8 million.

“It is very close to the threshold and, as the pandemic goes on, the more pressure it puts on our financial stabilization reserve,” said Gillingham.

Winnipeg Police Service exceeded its budget by $3 million this year, primarily due to an unexpected hike in employer pension costs, which was partially offset by other savings.

Mother Nature hasn’t helped city finances in recent months, with about 67 centimetres of snow in November and December. That led the city to exceed its $35-million annual snow clearing budget by an extra $11.2 million.

joyanne.pursaga@freepress.mb.ca

Twitter: @joyanne_pursaga