WINNIPEG -- The city announced its plan for the 2021 Balanced Budget Update on Friday, which updates the four-year balanced budget council announced earlier this year.
One of the main focuses for this budget is the challenges the COVID-19 pandemic has brought for Winnipeg.
Due to the circumstances that have plagued much of 2020 - what Mayor Brian Bowman calls one of the most uniquely challenging years in modern history - the city is predicting a budget shortfall of $83.6 million.
"We're continuing to see alarming COVID-19 case numbers in Winnipeg and it's a crisis that is gripping our community," said Bowman, who added this has created stress for residents and businesses.
Coun. Scott Gillingham, who is the chair of finance, said without a multi-year budget which was released earlier in 2020, the shortfall could have been much worse.
"At this time last year, in the multi-year budget process, the projected deficit for 2021, was $120 million," said Gillingham, adding Winnipeg could be facing a deficit of $185 million without the four-year budget.
Gillingham compared the budget to the anchor on a boat, when down the boat may drift side to side in a storm, but it will never be blown away.
That shortfall is made up of $28.5 million connected to a net transit shortage because of COVID-19, $14 million due to other COVID-19 related costs, $10.4 million in additional costs, and $30.7 million for the Winnipeg Police Pension Plan shortfall.
The city plans to balance this out over the next three years and has several steps in place to make that happen, including:
- Leveraging provincial capital commitment to invest in city capital projects, which equals $30 million;
- Replacing cash to capital with external debt, totaling $10 million;
- $12 million will come from savings from a recently negotiated collective agreement with the Winnipeg Association of Public Service Officers;
- $16.3 million will be an adjustment to the estimated amounts for future labour settlements; and
- Projecting $15.3 million in savings for the police budget, which will be determined by the Winnipeg Police Service.
The 2021 Budget also includes money from the federal government for the Safe Restart Agreement, which is money for COVID-19 operating costs, with Winnipeg's share being $42.2 million, and there is also $32.3 million for transit.
Of that money, $31.3 million will be used to keep the 2020 budget balanced and that will happen by reversing some levers in the COVID-19 Crisis Cash Flow Management Strategy, and also replacing the revenue the city lost from parking because of the pandemic.
The $32.3 million will go towards transit's 2020 operating budget and offsetting the money lost from the past year.
The city will also use $7.6 million to "ease the burden of the pandemic" and $3.3 million will be put towards affordable housing and the economy.
Gillingham said it would have been very difficult to balance the budget without the federal restart funds.
"We would have drawn our reserve balance down below the six per cent threshold that we need to maintain it at. So, could it have been done, possibly, but it would have put us in a very difficult, I would say precarious position going into 2021, still facing the pandemic," said Gillingham.
CITY OUTLINES THREE-PART PLAN RESPONDING TO THE COVID-19 PANDEMIC
With COVID-19 being front and centre for most of 2020, the city also outlined three ways it plans to respond to the pandemic.
Part one consists of keeping people safe, and the city will spend roughly $4 million to buy personal protective equipment for frontline workers as well as additional cleaning supplies for transit, police, community services and other departments to help keep city employees and city facilities safe.
The previously mentioned $7.6 million to reduce some of the stress caused by the pandemic will be divided into $3.8 million, which will go towards the property and business tax deferral program as it is being extended into 2021.
A grant program that will support small businesses and not-for-profits that were forced to close will receive $3 million.
The program applies to anyone who had to shut down on Nov.12 because of the province's health orders. Each organization can receive up to $1,500 each and it will be available if they have under 100 employees.
Organizations can apply for the grant and they must specify what they intend to use the money for. The deadline is Feb. 28, 2021.
"It's recognizing that all levels of government have an opportunity to support small business," said Bowman.
The city will also provide $600,000 worth of grants to community organizations to help Winnipeggers connected while still following public health orders, and $250,000 will help with counselling and other supports for paramedics and firefighters.
Part three also includes the previously mentioned $3.3 million for affordable housing and the economy. Of that, $2 million will be grants for developers to provide affordable housing, $750,000 is to support additional planning staff, and $500,000 is being used to re-establish the Office of Economic Development.
CITY PROPOSES SIX-YEAR CAPITAL INVESTMENT PLAN
As part of the preliminary budget, the city is also proposing a six-year $2.3 billion capital investment plan. It would go towards renewing "existing city assets and build new assets" to help Winnipeg grow.
"Investments in capital infrastructure are critical to support a modern growing city," the city said.
The city is estimating the investment plan will boost GDP to over $1 billion in the province and throughout the country. It is also saying it would create over 10,000 person-years of employment and would create $111 million in tax revenue to the province and $139.2 million to the feds.
This proposed plan would include $864.1 million for road renewals, $131.8 million to purchase buses, $180 million for the Combined Sewer Overflow mitigation program, the Water Meter Renewal Program would get $39 million, $60 million would go towards a new sewer interceptor in the southwest, $32.1 million for infrastructure at Assiniboine Park, and $29.2 for the city's tree canopy.
The plan would be funded through grants from the province and country worth $525.4 million, cash to capital of $79.5 million, $60 million from frontage levies and $210.2 million of external debt.
HOW THE CITY IS SUPPORTING RECREATIONAL FACILITIES AND LIBRARIES
The city said it heard from Winnipeggers that community services were the number one budget priority and therefore for 2021, the city has created a $50 million Recreation and Libraries Investments Plan.
Some of the money, $15 million, would go towards indoor pools across Winnipeg, $5.9 million would be for developing the Old Ex arena, $5.5 million to upgrade libraries including Millennium, St. James and Westwood, and also $1.8 million for the Turtle Island Neighbourhood Centre.
"A major focus of this strategy is making recreation investments in high needs areas of the city, which was also a critical recommendation of the Illicit Drug Strategy Taskforce report," said Bowman.
He added this is an important time to get some of these projects going because even though Winnipeggers can't use many of the facilities now, "the storm will pass" and people will once again want to get out for recreational activities.
"These projects also take time to build. As much as I would like them all built in the next few months, this is multi-year."
CITY PROPOSES RAISING THE SMALL BUSINESS TAX CREDIT
One of the harder hit sectors because of the COVID-19 pandemic is small businesses and because of that, the city has proposed to raise the Small Business Tax Credit.
The credit would grow from $35,700 to $44,200 and this would stop the Small Business Tax for around 1,000 businesses next year. It would save each business around $1,926.12.
If this takes effect, it would mean around 55 per cent of businesses would be receiving a full credit on their taxes and the tax rate would also stay put at 4.84 per cent.
OTHER ANNOUNCEMENTS FROM THE CITY
The city is also investing an additional $3 million for trees. This would go to the $37 million that is already part of the multi-year budget, rounding out the total investment to $40 million.
This extra funding will help combat threats such as Dutch Elm Disease and Emerald Ash Borer and also continue with the response from the October 2019 storm.
As part of the road renewal section of the Capital Investment Plan, $152.2 million will go into road renewals for 2021 alone.
Property tax increases will stay a 2.33 per cent for the next three years, meaning homeowners will pay an extra $42.34 for property taxes in 2021.
The police budget will increase by around two per cent every year from $294.5 million in 2020 to $312.4 million in 2023.
Bowman and Gillingham were asked what happens if COVID-19 continues to be a real problem throughout 2021.
Bowman said budgets are something that need to be adjusted and time goes on.
"Our COVID-19 crisis cash flow management plan or strategy is one we have been utilizing throughout this year. Obviously, that is what next year's budget update could be used for, if necessary," said Bowman. "What we didn't want to do is presume that it was going to end at the end of this year. So what we've done, is we've looked forward, we've been realistic. We believe it is going to affect, significantly, our finances into the next year. We've planned appropriately for that annual budget update."
The preliminary budget for next year will be discussed at the Standing Policy Committee and Winnipeg Police Board over two weeks and then council will vote on it on Dec. 16.