Projected $23M deficit, depleted reserve fund leave City of Winnipeg in 'new territory': finance chair
'We have not been at a place like this in the decade that I've been here': Mayor Scott Gillingham
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 — down from a projected $40-million deficit in June, but an increase of more than $4.2 million from the $19.2-million deficit forecast in the last financial update, delivered in September.
The city has repeatedly drawn from its fiscal stabilization reserve — sometimes referred to as its "rainy day fund" — 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 increase property taxes higher than 3.5 per cent he committed to in the last civic election.
"We have not been at a place like this in the decade that I've been here," Gillingham said.
The city has grown by 65,000 people in the last three years, and the latest budget update underscores the need for a new funding agreement between the city and the provincial government, he said.
"We must always do all we can to control our costs, but we also have to deliver services to a growing city. And so that's what is making this budget process so difficult."
Manitoba's NDP government committed to holding discussions on a new funding formula for municipalities in the 2024 budget. Gillingham said he hopes to hear something about that at next week's meeting of the Association of Manitoba Municipalities.
Clarifications
- This story has been edited to clarify that the city's last financial forecast, projecting a $19.2-million deficit, was released in September.Nov 21, 2024 5:43 PM CT
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