City projects $1.4M deficit

The City of Saskatoon is projecting a million-dollar deficit but the widespread year-end belt-tightening that has characterized the past decade won’t be needed, the finance manager says.

"It has almost become expected that at the end of the year we’re going to go into a spending freeze and that’s not a good way to operate," said city finance manager Kerry Tarasoff.

"We’ve got to quit crying wolf. It’s not conducive to good business."

The year-end shortfall is expected to be $1.4 million, less than half of one per cent of the $300-million city operating budget.

City departments were urged to be more realistic in their year-end projections, Tarasoff said. In the past, departments have been "conservative" in making year-end estimates, which has often led to the city looking like it’s in the red as the end of the fiscal year approaches before recovering thanks to discretionary spending freezes.

Last year, a multimillion-dollar deficit was projected in November that forced cost-cutting across city hall departments. The city ended up posting a $3.7-million surplus, the largest on record, after three years of deficits between $1 million and $2 million.

Such major freezes, which are based on conservative spending estimates, are "not good business," Tarasoff said.

"We’ve told (department managers) that you will not be raked over the coals because you’re forecasting a smaller number and come in over," he said.

The largest contributor to the 2010 projected deficit is a $1.8-million shortfall from reduced franchise fees from SaskEnergy. The city receives a payment for delivering natural gas to customers inside Saskatoon, but warm weather during the winter led to huge drops in consumption.

The wet spring and summer also led to $3 million less in water revenue, which is being offset by savings from the purchase of chemical supplies, a spending freeze and electrical savings from pumping less water.

The city under-estimated the salary expected for police officers by $850,000, the report says. Saskatoon officers are paid around 98 per cent of the Prairie average for police services. Their salaries will be bumped up by 4.7 per cent for 2010 because of other police contracts being settled, Tarasoff said.

The transit department, which is under a spending freeze, is running a projected deficit of $400,000 thanks to bus operator overtime on the expense side and lower-than-expected revenues from more customers buying new discounted bus passes instead of paying cash or buying tickets, the report said.

Any year-end deficit would be covered by the city’s revenue stabilization reserve, which was topped up to more than $3 million last year after hitting zero from a string of deficits.