Deficit forecast plummets from $27M to $1.2M as City of Winnipeg's police pension burden eases

The City of Winnipeg's financial outlook appears have improved significantly compared to earlier this year.

A new report shows the forecast deficit in the city's general revenue fund for 2023 has shrunk to $1.2 million, down from a projected deficit of $27 million.

An additional shortfall of $2.2 million is expected for Winnipeg Transit, down from an earlier estimate of$2.5 million.

The numbers, released by the city Friday,reflect information up to the end of the second quarter on June 30.

The city attributes the lower deficit forecast largely to a reduction in the city's contributions to the Winnipeg Police Service pension plan after an actuarial valuation.

Thevaluation resulted in the employer contribution rate being dropped to eight per cent, rather than the budgeted rate nearly 22 per cent, according to the city,leading to anestimated savings of $23.7 million.

COVID-19 continues to affect on the city's budget, but that has also dropped significantly from recent years.

The 2023 budget initially included $18.7 million for COVID-19 impacts. The latest forecast identifies an additional $2.8 million, for a total of $21.5 million in pandemic-related costs.

However, those costs added up to $53.7 million in 2022 and $73million in 2021.

An action plan developed by the city to minimize any potential use of the city's financial stabilization reserve, commonly referred to as the rainy day fund, also contributed to the improved forecast.

The current balance in the stabilization reserve $19.5 million would not have been enough to cover the deficit forecast in the first quarter. The city now expects the remaining balance in the reserve to be $18.4 million.

The remaining deficit is largely the result of an overexpenditure of $6.9 million in the Winnipeg Fire Paramedic Service, due to overtime and Workers Compensation Board claims;a shortfall of $6.5 million in the property and development department due to a decrease in permit fees and transfers from the land operating reserve; and snow clearing and street cleaning cost overruns of $6.3 million.

The financial status and forecast report will be presented to the city's finance committee at its meeting next Thursday.

The city posted a record deficit of $83 million last year.