The City of Winnipeg could be more than $73 million in the red if the COVID-19 health crisis reaches to the end of July, but Mayor Brian Bowman is so far holding back on measures to cut staff or services.
The grim numbers are part of a report to city council in advance of a meeting Friday to vote on property and tax deferrals for 90 days and to declare a local state of emergency.
Councillors will be asked to sign off on a package of relief for thousands of rate payers financially affected by the pandemic.
Those include waiving penalties for unpaid 2020 property and business taxes for three months, and eliminating a 7.5 per cent penalty for unpaid taxes in August for business taxes and September for property taxes.
City staff estimate the lost revenue for the tax relief package is $5.2 million.
Mayor Brian Bowman says those measures are designed for residents facing financial hardship because of the health crisis.
“To those who are able to continue to pay taxes, thank you,” Bowman said Thursday. He said those who are paying their taxes are helping cover costs for police, fire, clean water and other city services.
The tax deferral program is only the start of projected lost income and extra expenses for the city as the COVID-19 pandemic continues to impact its finances.
Lost revenue, new expenses could create massive fiscal hole
The worst case scenarios outlined in the report look at projected lost revenue and increased costs up to July 31, and add up to a city budget $73,194,820 in the red.
Losses from a massive decline in transit ridership account for a potential loss of $25.2 million in fares, and an estimated $2.6 million in added expenses to sanitize and clean buses and pay overtime to drivers.
The city would face $7.35 million in lost income from permits and fees, and an $8.4 million decrease in revenue from the Winnipeg Police Service. The majority of that comes from a huge decrease in photo radar tickets.
$3.4 million in revenue for swim programs and membership passes would disappear, though some costs would be saved through reduced expenditures as programs are cancelled.
Paying overtime and providing personal protective equipment to fire, ambulance and paramedic staff is expected to cost $3.67 million by July 31.
The city also takes a $6 million budget hit from losing an arbitration decision in a dispute over police pensions and a further $600,000 in expenses for penalties the arbitrator awarded to police officers and their union.
The report to city council cautions “as this is early on in the event, both the duration and impact are difficult to estimate.”
The city has a cash cushion of $107.8 million in its fiscal stabilization fund. That could be drawn down to $52.5 million if the crisis continues to the end of July.
Some retained earnings drawn from Winnipeg Transit and some cash from general revenues would make up the difference.
Winnipeg is required to keep six per cent of its tax-supported expenditures in the reserve and to maintain a liquidity rate (the ease of which assets can be turned into cash) of 30 per cent (as preferred by credit rating agencies).
If both those benchmarks are challenged, the city has a number of measures it might take, including drawing from its own line of credit, asking the federal and provincial governments for financial assistance, cutting capital spending or laying off staff and reducing services.
So far the city of Winnipeg has not joined many other Canadian municipalities in cutting staff or temporary workers.
Speaking to reporters at a briefing Thursday, mayor Bowman said “we are not there yet…we are not making decisions on those tomorrow.”
Bowman did acknowledge there are several “risk items” in the city’s finances and they would have to be addressed if the crisis didn’t pass soon.
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