Deficit could force Winnipeg to completely drain rainy day fund
First quarter budget update predicts $27M deficit, mostly due to police and fire paramedic shortfalls
The City of Winnipeg might have to completely drain the remaining money in its already depleted rainy day fund to cover a projected budget deficit.
In its first quarterly update for 2023, the city forecasts a deficit of $27 million, mostly due to shortfalls in the Winnipeg Police Service and Winnipeg Fire Paramedic Service budgets, according to a news release issued Monday. The city's first quarter budget update includes expenses up to the end of March.
The police service expects a $12.8 million shortfall, attributed to lower revenue from traffic tickets and other enforcement activities, as well as its inability to meet expense management targets.
Council ordered the police to find $9.2 million in savings this year, but representatives of the service warned the Winnipeg Police Board in March that will be difficult to meet without cuts to services.
The fire paramedic service predicts a deficit of $7.4 million, due to firefighter overtime and workers compensation costs, the release said.
Finance officials also predict an additional $1 million in COVID-19 impacts, on top of the $18.7 already included in this year's budget. Pandemic-related impacts have lessened this year, compared to $53.5 million and $73 million in 2022 and 2021, respectively.
The city posted a record deficit of $83 million last year.
This year's budget replenished about $19.5 million to the city's fiscal stabilization fund, sometimes referred to as its "rainy day fund," which would be completely emptied to cover this year's deficit, if council approves.
The city will need to come up with a plan to cover the remaining $7.5 million shortfall, the news release said. That plan will be presented to the finance committee on June 30.
"It is common that the city forecasts a deficit through the first quarter of the fiscal calendar," Coun. Jeff Browaty, chair of the finance committee, said in the news release.
"That being said, the current forecast does pose a serious challenge for the city for the remainder of the year. Departments will be required to maintain prudent fiscal management going forward as the city focuses on these early operating shortfalls."
In addition to the $27 million deficit in the city's general revenue fund, Winnipeg Transit expects a shortfall of $2.5 million, due to ridership levels that remain 17 per cent below pre-pandemic levels, according to a report posted Monday.
The transit deficit will be funded from retained earnings, which the service budgeted for.