City of Regina rules out property tax hike as it considers revenue shortfalls due to pandemic

The City of Regina's city council will not raise property taxes during the COVID-19 pandemic as it works to balance the municipal budget, despite staring down a possible $20.7 million revenue shortfall by the end of September.

The city is deciding how to cut costs while working to maintain essential services throughout the city. It has already taken some measures, like layoffs to casual employees, and may look at leaving vacancies unfilled.

"This is a not a time to raise taxes. We have people who have lost businesses, people who are unemployed," Mayor Michael Fougere said during a news conference on Tuesday. "That is not on the table. We are not raising taxes."

Fougere says the city could make it through the warmer months before its flow of cash runs dry because of the COVID-19 pandemic.

The pandemic has shut down the city's money makers, as property tax payments have been deferred to September, money from traffic tickets has decreased due to relaxed enforcement and leisure centres have closed.

"We'll have to deal with that right away," Fougere said, in advance of special city council meeting scheduled for Wednesday. 

"We do have to [find] a resolution pretty quickly because that cash flow problem will really end up really putting us into a corner."

The revenue shortfall will sit around $7.7 million on April 30. It's projected to rise to $12.1 million in lost revenue by June 30, before projections break $20 million.

City manager Chris Holden has made various recommendations to city council, who will consider options at a special council meeting Wednesday in Regina.

In Fougere's opinion, some of the options available make sense while other recommendations are debatable. The city's reserves are also to be used in unforeseen circumstances, like a global pandemic, he added.

Project deferrals to be considered

The city will consider deferring $6.4 million worth of construction which was supposed to occur as part of the residential road renewal program. The money would then be re-directed to COVID-19 operating expenses by the city. Remaining money would go back into the renewal program.

Holden's report projects savings of $4.1 million through not hiring for vacant positions unless necessary for operation purposes.

It's estimated there could be savings of $500,000 in reduced fuel expenses, as well as saving $1 million on travel, conference, training and related expenses. Money could also be re-directed from recreation and traffic infrastructure.

The city manager's report looks to reduce city expenses by $7.4 million in total, while possibly deferring $7.2 million worth of capital projects. 

Projects considered for possible deferment were described as "invasive," multi-year projects by Fougere.

Request for proposals would typically be issued by the city this time of year, but the mayor said that will be on hold, at least until after some decisions are made at the meeting. Construction on Maple Leaf Pool is already underway and it will be completed.

"I think it's fair to say some capital projects will likely be deferred," Fougere said, "How many there are and which ones they are, we have not decided yet."

He said Regina's position is not unique in Canada and that the city is in relatively good shape at the moment, with a AAA credit rating.

'Interest-free' fund pitched, but government non-committal 

The president of SUMA says the group has pitched an interest-free fund that provincial municipalities could draw money from, in the event of property taxes are deferred or if operating expenses are low in general.

Gordon Barnhart says municipalities are still operating in a modified capacity as public buildings are generally closed to the public during the COVID-19 pandemic while services are being maintained.

"They're still having to pay for all of those essential services they're providing. It's a challenge for the communities," Barnhart said on Monday.

The Saskatchewan government is regularly meeting with groups like SUMA and municipal leaders to share information and concerns, according to an email statement from Jay Teneycke, executive director of communications for the Ministry of Government Relations.

"In the meantime, like all jurisdictions and businesses, municipalities are encouraged to reach out to their financial institutions and lending agencies for borrowing options," Teneycke said.

He added the Municipal Revenue Sharing program, a fund projected to be worth about $278 million in 2020-21 from which municipalities can draw money if they are eligible, is unaffected by the pandemic.

"The issue with a loan is that the municipality at some point is still going to have to pay that back," Barnhart said."

Municipalities are also required to balance their budgets annually, as required by the Cities Act, provincial legislation. 

Barnhart said some additional help like a rebate on the federal gas tax to cities could provide immediate relief. A provincial tax cut could help as well, he said.

"It would be very nice if the PST on construction for municipalities was removed, so that building construction could go ahead," he added.

Construction is considered an essential service, which means it can continue during the pandemic. A six per cent provincial sales tax has applied to certain construction costs since April 2017.