City of Saskatoon finance committee approves plan to deal with an almost $11M 2022 year-end budget deficit

Saskatoon city council's finance committee has approved a recommendation from city staff to primarily use money from the city's reserves to cover a significant 2022 year-end budget deficit.

A report presented to city council's finance committee on Wednesday showeda deficit of $10.99 million in civic operating programs for the previous year. It also presenteda financial plan to address the shortfall.

Inflationary pressures, $1.94M more than expected in fuel costs, lots of work for the city's snow and ice program and less revenue in areas such as leisure centres, parking servicesand parking tickets all played a role in the 2022 deficit.

Under provincial law, municipalities are not allowed to operate with a deficit.

Tiffany Paulsen, a former Saskatoon city councillor and current partner of law firm Robertson Stromberg LLP, says deficits aren't irregular in Saskatoon.

"Saskatoon has over a $550-million annual operating budget, so as shocking as the $10.99 million is to our individual senses, in the grander context of a budget that large it's not as hard for the budget to swing either way," Paulsen told CBC Radio'sSaskatoon Morning guest host Theresa Kliem.

"So just as easily as they could run at an $11-millionbudget deficit, they could just as easily next year run at an $11-millionsurplus."

LISTEN|Saskatoon political experts discuss 2022 budget deficit:

Saskatoon Morning10:27City budgets are massive, multi-million dollar undertakings

The city is projecting a deficit of almost $11 million for 2022, and under provincial law must find a way to balance it. Guest host Theresa Kliem speaks with policy experts Tiffany Paulsen and Derek Eisner about what's behind the deficit and what could help balance it.

Where will the money come from?

City administration recommendedthat $6.68 million be transferred from the city's fiscal stabilization reserve to help offset the deficit.

The 2022 year-end financial report showsthe transfer from the fiscal stabilization reserve would leave it with no money left, but this year's budget would put back $1.64 millioninto the reserve to cover potential deficits for the 2023 year.

"If you look over the past 10 years, you'll see the city drawing in and out of that fiscal stabilization reserve, probably on an annual basis either way,"Paulsen said.

Another $2.3 million would come from other existing reserves, or delaying reserve transfers. The city's fuel stabilization reserve, and snow and ice management reserve, would both be completely drained.

The remaining $1.97 million in the 2022 budget shortfall which is from costs of addressing a heavy snowfall in December wouldbe covered through a future loan approved by Saskatoon city council.

City councillor Bev Dubois, who sits on the finance committee, told Wednesday's meeting that she appreciates the city's reserves and is proud that the city put that money away in previous years.

"It's in times like this where we see how those reserves [prove useful], even though sometimes when we're putting money in years gone past into reserves thinking, 'Well, you know, we could use that money for something else,'" she said.

"But we vote to put it in there. It's a good thing that we did."

Giving citiesmore governing autonomy can help reduce deficit: expert

Derek Eisner,who teaches a class on local governance and policy at the University of Saskatchewan, saidthe province could changeregulations tohelp municipalities reduce deficits and the need to take from reserves.

"We're still governed mainly by the provincial government and that puts a lot of constraints on the city's governing mobility," Eisner told CBC Radio's Saskatoon Morning guest host Theresa Kliem.

Eisner said municipalities should have more of a say when it comes to governing as the population continues to shift from rural to urban areas.

He said the big barrier is limited taxation mechanisms.

"We've been under this framework whereeverybody predominantly lived in rural areas, and not much has changed in terms of taxation powers for municipal governments," Eisner said.

"It's really a provincial and municipal government conversation that needs to be had."