Next Winnipeg city council to face $55-M deficit

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This article was published 05/09/2022 (744 days ago), so information in it may no longer be current.

The City of Winnipeg expects to end the year tens of millions of dollars in debt, which could force some tough decisions on what it can afford next year.

“The next council will certainly have to make some hard choices,” said Coun. Jeff Browaty, council’s finance chairman.

The city predicts its tax-supported operating budget will reach a deficit of $55.9 million by the end of December, along with a separate $14.7-million Winnipeg Transit shortfall, based on financial data up to June 30. While civic finances tend to improve in the final months of the year, the current second-quarter deficit prediction nearly quadruples the largest shortfall predicted by that date since 2017, a finance report notes.

The losses are expected to drain most of the financial stabilization reserve, or “rainy day fund,” which is on track to plummet to $20.1 million at the end of 2022 to cover the shortfall. That’s far below its $71.7-million council-mandated minimum, the report notes.

Council is expected to take measures to restore the fund as soon as possible, said Browaty, which he believes may require the civic government to “refocus on key priorities.”

“I love our libraries… but do we need to have every branch open on the weekends in the middle of summer when people aren’t using the libraries, as some (election) candidates were talking about? I’m not sure that that’s necessarily a priority,” he said.

The councillor stressed he’s not advocating the city cut library hours but said it likely can’t afford to expand them. He said the city may need to stop adding new investments in housing, a provincial responsibility he believes the municipal government lacks enough resources to support.

“We’re not going to make a material difference in that field, so why are we now investing in… something that’s not a core responsibility?” said Browaty.

While the COVID-19 pandemic has wreaked havoc with the city’s finances for years, high gas prices, an incredibly snowy winter and other inflationary pressures have created additional challenges.

A finance report notes Winnipeg Transit ridership still averages about 39 per cent below normal levels in 2022, years after it first plummeted due to COVID-19. Transit expects to cover $6.6 million of its $14.7-million deficit through retained earnings, with the rainy day fund expected to fill the gap. While the federal government has committed $20.7 million in transit support to Manitoba, Winnipeg’s share has not been confirmed, so that funding has not been factored in, the report notes.

Browaty said he’s optimistic support will come through soon to ease pandemic-related losses. However, he cautioned the spread of COVID-19 remains unpredictable and new cost pressures remain a concern.

“We’re (still) dealing with unprecedented fuel costs and this past winter’s snowfall,” he said.

Council had approved $34.2 million in extra snow-clearing costs this year and is now being asked for an additional $5.9 million.

Meanwhile, Winnipeg Police Service expects a $10.9-million shortfall, since it isn’t on track to achieve a council-imposed savings target, and traffic enforcement revenues are falling short of budget targets.

The Winnipeg Fire Paramedic Service expects to exceed its budget by $8.4 million for fire, due to a surge in overtime costs, and face a $2.6-million shortfall for emergency medical services.

The EMS budget crunch is blamed primarily on increased longer-term injury claims and overtime, though Shared Health is expected to cover that cost, another report notes.

Browaty said he wouldn’t support the idea of imposing a large tax increase to reduce the city’s financial losses.

“Now is not the time to go with heavy tax increases… In my mind, with the cost of inflation and everybody having to stretch their own dollars more, (the city) has to do that as well right now,” he said.

Some city losses were offset by savings in the city clerks, community services and corporate services departments.

Joyanne.pursaga@freepress.mb.ca

Twitter: @joyanne_pursaga