Pandemic continues to hammer city of Winnipeg finances

As the effects of the pandemic drag beyond a year-and-a-half, the City of Winnipeg's finances continues to take shots to its balance sheet.

A persistent mix of declining revenues and extra expenses caused by the pandemic has the city's finance committee chair Coun. Scott Gillingham warning it could take years for the city to recover.

"It's going to make the 2022 budget year very very challenging," Gillingham said Monday. 

The most recent fiscal update report suggests the health crisis has put the city into uncharted fiscal territory.

The report, part of the finance committee's agenda for their next meeting on Sept. 17, shows a deficit of $14.3 million in the city's general revenue account, while Winnipeg Transit is facing a $12.4 million deficit due to lower ridership levels.

Transit ridership was 57 per cent lower in 2021 than pre-pandemic levels, the report says. 

Across city departments there have been an additional $23.6 million in COVID-19-related financial impacts, above the $61.2 million in COVID-19 financial impacts that were already built into the city's 2021 budget. 

The current estimate is a net financial impact of $84.8 million related to the pandemic. 

It's a trend that continues to dog the municipality, and the length of the health crisis may see the city lean deeply into it's reserves, the report suggests. 

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The city typically runs deficits in the first two or three quarters and then gets closer to balancing the books before the end of the year, but that trend appears in peril.

"Due to the uncertainty related to the pandemic, this trend may not hold true in the current year," the report says. 

The city's financial stabilization reserve fund had a balance $119.9 million at the end 2020.

No cuts, yet 

Gillingham said he wasn't prepared at this point to suggest service cuts, but is still sounding a warning. 

"The City of Winnipeg's finances are not going to recover like flicking a switch. Even if the pandemic winds down, it's going to take multiple years for the City of Winnipeg's finances to recover to pre-pandemic levels," Gillingham said. 

The city benefited from financial aid from the federal government at the onset of the pandemic but Gillingham doesn't see that assistance on the horizon. 

There could be some help from Ottawa in the form of support for capital projects through the gas tax, Gillingham said, but little in the way of grants from the provincial government.

In fact, the city is being challenged by the province on a payment for the cost of delivering ambulance services. 

Winnipeg operates the service, but the province is obligated to pay those expenses.

Gillingham says Manitoba's Shared Health department has not paid for $861,854 in salary increases for ambulance staff and is asking for a more documentation on the expense.

Gilligham says the arrangement with the province to provide the service is on a full cost recovery basis.