The ongoing coronavirus pandemic is affecting how municipalities conduct finances and budgets, including in the City of Kawartha Lakes, where a $3.2-million shortfall is expected this year.
According to a staff report for council on Tuesday, the municipality recalled $10 million in investments to address a shortfall in revenues.
The current forecast for cash flow projects an additional draw from investments of $2 million later in the year.
Drawing from these investments will represent internal borrowing and will need to be paid back, the report states.
A positive in the financial statement from Jennifer Stover, director of corporate services, is that the property tax deferral didn’t have as big of an impact on the municipality’s bottom line as initially expected.
“About 50 per cent of our residents paid their property tax in April so that was a surprise to us and greatly appreciated,” Stover told council.
A long-range financial plan was supposed to be presented to council by now.
But it was placed on hold, along with other non-essential work, at the outset of the pandemic.
Given the fact the situation is fluid and ongoing, the comprehensive update is deferred until 2021, and a financial recovery plan will inform that update.
Another deferral is the 2021 budget.
By now, the budget process would already be underway at the staff level, but staff have been focused on the financial response and recovery, which has delayed the budget process.
It’s recommended that the budget be deferred into the first quarter of 2021, which is a similar schedule to what occurs following a municipal election held in October.
“This change in timing will allow staff to provide council with a more comprehensive update on the cost of the pandemic and the 2020 financial implications prior to establishing the 2021 budget,” the report states.
Last month, chief administrative officer Ron Taylor told council about the projected revenue shortfall but also brought up a potential surplus estimated at $3 million from 2019.
The financial update states an audit would’ve been done by now on the 2019 budget, but like the 2021 budget and long-range financial plan, it’s been delayed.
The audit is now underway with council likely getting an update in September on the recommendations of what to do with the surplus.
On previous media teleconferences, Mayor Andy Letham and Taylor were adamant the money not be used in the 2020 recovery process and instead put into a reserve for use in the 2021 budget and beyond.
Tuesday’s financial report had initial numbers from the surplus, including a $2.6-million deficit in the winter control budget, which was largely offset by a surplus in the roads operation budget of approximately $2.3 million.
The remaining $1.8 million in surplus includes approximately $600,000 in bank, investment and property tax interest; approximately $600,000 in accounting adjustments; and approximately $400,000 in Ontario Municipal Partnership Fund grants that the municipality didn’t anticipate when it made the 2019 budget.
Council also receive a detailed list of the capital projects that are ongoing, including those that were deferred because of the pandemic but can proceed in 2020 and projects deferred to 2021.
Councillors also discussed the ongoing state of emergency.
Only Ron Ashmore spoke of putting a firm deadline on it, while the rest of council agreed the local state of emergency stay in place to mirror the provincial declaration, which is in-effect until June 30.View link »