The City of Saskatoon is facing a preliminary deficit of 1.94 per cent for the year 2022, and city administration has recommended a proposed plan to address the shortfall.
“We knew early in 2022 that a significant deficit was possible. The Administration brought forward a comprehensive plan to City Council in early 2022 which included spending decreases and anticipated funding sources for a projected deficit. The strategy we are putting in place now is based largely on the plan prior approved by council in March 2022,” the city’s director of finance Kari Smith said in a news release.
A deficit adding up to $10.99 million in the civic operating programs includes $1.97 million of expenditures related to the December 2022 snow event.
Due to the approved borrowing of $20 million at a Jan. 25 council meeting, the December 2020 expenditures will be paid off and subtracted front the city’s preliminary deficit, making the final number $9.02 million.
Major factors causing the deficit include:
- inflationary items
- $1.94 million more than expected in fuel costs
- snow and ice management program
- less revenue in areas such as leisure centres, parking services and parking tickets
Under provincial law, municipalities can’t operate with a deficit. In order to combat the preliminary deficit, city administration is recommending the deficit be funded with:
- $14,200 to the internal audit program reserve
- $17,659 to the animal services reserve
- $173,247 to the reserve for unexpended youth sports subsidy funds
- a reduction of $710,740 from the roadways operating program to the paved roadways infrastructure reserve
- a transfer of $500,000 from the special events reserve
- $924,395 from the land operations reserve
- $6.68 million from the fiscal stabilization reserve
Smith told Global News in an interview that the city will have $1.64 million in the fiscal stabilization reserve for any potential deficits in 2023, and also ensure all other reserves are healthy.
“The other reserves we consider carefully to make sure that there would be no impact to those programs in 2023, so those reserves have enough funding to make sure they can support any of the future ongoing operations that they would normally support.”
Looking ahead to the end of 2023, Smith said there is still a global contingency built into the budget of about $5 million that will account for any unforeseen broader risk. She adds that the city continues to use other ways to cut costs.
“We have kept the spending restrictions in place, so deferring hiring where that makes sense, restricting travel training, office supplies, materials, those type of things are still in place within the city.”
Smith adds there were adjustments made within the 2023 budget process to reduce revenues in areas like leisure centres, parking, parking services and parking tickets to better match expectations in revenues.
If approved, the proposed option would not have any impact on the taxpayer, and options to pay off the $20-million loan taken for snow removal will come before council during the budget deliberations for the 2024-25 budget cycle.
The proposed plan will be presented in front of the city’s standing policy committee on finance on March 8.
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