Fuel costs, snow and COVID-19 push up Winnipeg's projected budget shortfall

The City of Winnipeg's expected budget shortfall at the end of this fiscal year has grown by $2 million in the last three months.

In its first quarterly update, which was presented to the finance committee in June, the city projected a deficit of $53.9 million. It now expects expenditures to exceed revenues by $55.9 million.

Winnipeg Transit's forecast deficit also grew, from $10.5 million to $14.7 million.

The main pressures driving up costs are the heavy snowfall the city received last winter and rising fuel prices, along with continued impacts of the COVID-19 pandemic.

Financial officials had projected fuel prices between $1.14 and $1.25 per litre in 2022 but now expect prices between $1.48 and $1.69 per litre for the rest of the year — an increase of 30 per cent.

That amounts to projected financial impacts of $9.3 million for general revenue, transit and other costs.

A late-spring snowstorm drove up spending on snow removal and ice control, on top of the $34.2 million in extra expenditures the finance committee approved at its meeting in April.

Total snow removal and ice control costs are now expected to be $40.3 million this year.

Last year, the city budgeted $41.3 million for COVID-19 impacts. It now forecasts $40.3 million for pandemic-related costs.

Projected deficits frequently decrease once the city makes its final financial report for the fiscal year, which is released in February.

The city is legally required to balance its budget. If the city runs a deficit, it will draw from its financial stabilization reserve fund to cover the shortfall.

The fund is currently projected to be $20.1 million at the end of 2022, after the shortfall is covered — $51.6 million below its mandated balance of six per cent of the tax-supported budget expenditures, after transfers.

The city has taken money from the financial stabilization reserve fund to balance budgets during COVID-19. Last year, it took $22.3 million to break even.