Omicron could cost City of Winnipeg more than expected in 2022, finance committee told
Council set aside $41 million for COVID effects in 2022, but staff warn costs are rising
The City of Winnipeg's financial staff are once again putting their heads together to manage the unexpected financial costs of COVID-19, since they believe Omicron has already wreaked havoc on this year's budget.
"We did estimate some impact of COVID-19 on the budget, but not to this extent," said chief financial officer Catherine Kloepfer today at a finance committee meeting.
"We didn't anticipate this virus being this pervasive and this transmissible and having this big an impact on, for example, staffing and overtime costs."
The city's 2022 budget includes $41 million for ongoing costs due to COVID-19, considering challenges including overtime for staff covering for sick colleagues and the loss of revenue from transit.
However, the COVID-19 variant Omicron has already forced hundreds of city staff to stay home, leading to many hours of overtime, and a further decline in transit use. Kloepfer estimates that transit could lose another $9 million due to reduced ridership and overtime for employees replacing colleagues affected by COVID.
"Included in that figure is the impact of the recent decision by the University of Manitoba to revert to online learning, which cancelled the U-Pass program or deferred it, which is estimated to be a loss of between $6.6 million and up to $7.4 million, depending on when the students return to class," Kloepfer said.
Kloepfer estimates the Winnipeg Fire Paramedic Service could also see overtime costsof around $5.2 million, and the Winnipeg Parking Authority could lose $1 million since there are fewer people parking on the street.
For now, the difference is being made up by the city's financial stabilization reserve, also known as the rainy day fund. Finance committee chair Scott Gillingham said the fund is about $7 million above its baseline right now, but he hopes to stop pulling from it to handle COVID costs.
"It had a strong balance going into the into the pandemic, but the longer this goes, the more we draw on the reserve," the St. James councillor said after the meeting.
"It's not the only thing we're leaning upon to get us through the pandemic. Obviously, we're working hard to control expenses. We've seen good growth in permits and development … I continue to be concerned about the length of the pandemic, but I'm very optimistic about the future of Winnipeg."
COVID cost city more than $160 million so far
The finance committee also received an update on how much COVID cost the city in 2021. According to the city's latest financial forecast, $61.2 million was built into the 2021 budget to deal with COVID costs. Now, those costs are looking more like $75.2 million.
Add on 2020's $92.3 million, and the city's financial staff have worked to find $167.5 million to support COVID costs.
"It's forced the city to really control costs in a real significant way," said Gillingham. "We did have the help of the federal government in 2020 with some incremental financing or incremental funds to the City of Winnipeg to assist with COVID-19. That was really important. But there's no doubt the impact of COVID-19 has been significant on the city's budget, and it looks like for 2022, too."
To deal with these unexpected costs, the CFO and her staff will return to the committee in March with another report detailing new ways to save money this year.
Gillingham said some of the ways they saved money in 2020 might not work now. One example is the cost savings they saw from public pools and libraries being closed due to public health orders.
Gillingham said right now, they're not at the point where they would reduce services any further, but they might if things get really bad.
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