From court rulings to COVID-19, City of Winnipeg’s budget under siege from all sides

By | April 2, 2020

British Prime Minister Harold Wilson is thought to have coined the phrase “a week in politics is a long time.”

If that’s the case, the last three weeks amount to a long, long, long time for the City of Winnipeg.

Consider city finance chair Scott Gillingham’s confidence on March 9, giving a presentation in front of a Winnipeg Chamber of Commerce breakfast audience on the city’s multi-year budget.

No one was social distancing that morning, despite the gathering storm. Gillingham was comfortable with the numbers, including the slightly over $100 million in the city’s fiscal stabilization fund.

“We do have some room to manoeuvre. Right now our financial stabilization reserve has a healthy balance in it,” Gillingham said

“I think this is one of the advantages though of longer-term budgeting, is there is a level of certainty and predictability.”

On March 9, finance chair Scott Gillingham told a Winnipeg Chamber of Commerce audience that he believed the city’s budget would be able to survive economic turbulence. (Sean Kavanagh/CBC )

Two days later, provincial Finance Minister Scott Fielding expressed similar confidence.

A cut to the provincial sales tax had been promised, and Fielding said the Manitoba government would be able to weather coming storms, with what he called the “most emergency-ready budget” in the province’s history.

Two weeks later (that’s a long long time by Harold Wilson’s calculations), the province’s rainy day fund would look like a popgun in the face of the economic beast coming. The PST cut was put on hold and Premier Brian Pallister was predicting a $5-billion deficit.

City budget may have a financial virus

The City of Winnipeg’s budget was passed a week earlier, on March 20, with the hope of $3.3 million in savings from the proposed PST cut.

Mayor Brian Bowman and his budget crew have been similarly unlucky with other blows to the city’s finances.

The multi-year balanced budget was based in part by cash that would come from a redrawing of the pensions awarded to police officers, perhaps freeing as much as $12 million in extra revenue for Winnipeg.

An arbitrator blew that apart in a March 27 ruling that will instead cost the city as much as $650,000 in penalties. 

That might gently be called “a reversal of fortune.”

Mayor Brian Bowman previously acknowledged losing an arbitration fight on a police pension dispute would be ‘one of many budgetary pressures we could have this year.’ (Jeff Stapleton/CBC)

The city is set to release a plan on Friday that would defer property and business taxes for some months, which would involve some kind of bridge financing for those missing revenues.

It’s impossible to know how many small businesses will survive the current COVID-19-inspired lockdown to reopen and be in a position to pay any taxes. 

Parking restrictions have been eased, which drains more revenue from both tickets and meter fees. Revenue from pools and other city facilities that have been closed has stopped.

Emergency workers are on high alert, there is a command centre running day and night, and Winnipeg Transit buses are as empty as a pub during a pandemic.

One by one, other cities across Canada are laying off hundreds of staff. So far, Winnipeg has kept its workers.

Perhaps the only good news in weeks of bad is that fuel prices haven’t been this low since the last Lord of the Rings movie was king of the box office (that was 2003).

Slight reprieve from court ruling 

Is there any other good news?

The city dodged a fiscal bullet this week after a decision by a Manitoba judge did not wallop the municipality with significant fines.

Queen’s Bench Justice Candace Grammond had previously ruled that members of the city’s property, planning and development committee were in contempt for ignoring a court order to consider a developer’s plan to build new Parker lands residential units.

Lawyer Dave Hill, representing developer Andrew Marquess, had asked Grammond to slap the city with more than $2 million in fines for not acting swiftly enough to deal with the case.

Grammond, however, gave ratepayers a reprieve in her ruling this week.

“Even though the respondents have the ability to pay a fine, I have concluded that the taxpayers should not ultimately bear that financial burden,” wrote Grammond.

Even a small victory, though, will still cost you money.

Winnipeg taxpayers will be stuck paying the legal costs for both sides. Though it isn’t a multimillion-dollar fine, it won’t be cheap.

The judge has also ordered the committee to process Marquess’s development application as soon as possible, but Justice Grammond acknowledged that might be held up because of the coronavirus crisis.

“At present, many people in Winnipeg are in isolation because of the COVID-19 pandemic, and generally speaking, business is not being conducted as usual,” she wrote.

Balanced budgets vs. COVID

On a press call Tuesday, Bowman acknowledged city revenues were “significantly down … much like many city businesses.”

The mayor says it’s too early to know the exact numbers for the impact of COVID-19 on the city, but he believes the “balanced multi-year budget” he delivered just in March means the city will be able to recover comparatively quickly.

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Mayor Bowman had a mantra in the months leading to that budget — that “difficult decisions” had to be made.

The result — a 10 per cent cut to a variety of community groups and arts organizations, scaling back some bus routes and a modest trim to library hours.

Those may look like the easiest decisions he’s ever made in his political career, once the financial fallout from the pandemic truly lands on everyone.

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