Pandemic Length Will Determine Financial Impact On City Coffers
It is the big question which does not have a clear answer and that is just what impact will the COVID - 19 pandemic have upon the City's finances.
According to a report the best case scenario - with pandemic subsiding by June 2020 the cost to the City will be under $1 million but if it continues for the entire year the hit to City finances will be in the millions of dollars.
In a April 13th report to Council city manager Jim Puffalt gave a picture which could be described as semi-hopeful to totally bleak.
“Without knowing the amount of time (the pandemic will last) and seasonal nature of our expenditures it’s pretty hard to put this to a monthly basis,” he said. “In our discussions with public health you need to see an extended time when there are no new cases and cases are dropping.”
In his report Puffalt wrote the hit to the City could come in many forms all of which would leave the present City budget scrambling for dollars to plug holes.
Top of the list for potential losses for the City are uncollectable property taxes and utility bills once the pandemic is over. The report does not state the amounts the City could potentially be out.
List of City Revenues Impacted By Pandemic - source City of Moose Jaw
At the present time the City is not collecting interest and penalties on property taxes and utility bills until September 30th.
The loss of businesses could have a direct impact, not just in unpaid property taxes and utilities but revenue from business licenses.
Other areas where operationally the City's finances are expected to be hit is in the area of land sales and building permits as the major impact COVID - 19 is expected to have on local economic activity.
Provincially, nationally and worldwide the Gross Domestic Product is suppose to head into negative territory with the world economy not recovering in 2020.
To help ease the financial strain Administration found potential operational savings within the budget.
The potential savings come in a combination of not paying laid off employees, utilities for shuttered facilities and even a reduction in cast iron water main repairs.
Savings identified in the Operating Budget - source City of Moose Jaw
An example of an area where the City can save money is the maintenance of ball diamonds because pf the restrictions on the number of people who can gather at an event.
“If that (baseball season) is not going to happen which we expect it won't there is cost savings to be had,” Puffalt said.
In total the reductions are expected to net the City $3,104,153.
Transfers the City pays to third party groups - Tourism Moose Jaw, Moose Jaw Cultural Centre, Art Museum, Moose Jaw Public Library and others - are another area targeted by Administration to secure savings as the arm's length groups have been asked to come back with reduced requests because their operations have been curtailed by the pandemic.
Despite the ability to limit expenditures in some areas in other areas the City cannot.
“We are very similar to some businesses that we cannot shut down. There are some things we have to insure we will absolutely provide,” Puffalt said.
“We think we are saving $250,000 a month with the measures we have taken so far,” he said.
Capital Budget
Administration recommended some major project and equipment deferrals in the Capital Budget.
Initially $82 million was budgeted for equipment purchases and capital projects with a target of 90 percent beimg spent. Given the effects of the pandemic Administration recommended cutting $29.3 million resulting in $36.5 million to be spent on projects evaluated in manner to reduce expenditures.
Capital projects will be assessed under the following criteria:
1. The priority of the project – Projects that are crucial to the ongoing supply of water and sewer services and those that have safety implications are rated the highest priority.
2. The cashflow implications of the project in the short term – A project’s cash demands over the next six months are considered with cashflow minimization during that period considered a priority.
3. The impact on local contractors – Local businesses have been hard hit by the economic turndown as a result of the pandemic. Where possible, if local contractors will receive a significant benefit from a capital project, then it is considered more of a priority.
Discussion
Councillor Crystal Froese asked if the pandemic lifted earlier than expected if there would be an opportunity to bring some projects back later in the Summer?
“Do we have a plan or a recovery strategy to reactivate again if we start moving towards the Summer?” Councillor Froese asked.
Puffalt responded there may be an opportunity for some of the projects which were a higher priority to be re-instated (such as new female change rooms at the Pla-Mor Palace) but “generally we're looking to have those in 2021 and have them on the budget.”
Parks and recreation director Derek Blais said there were three projects which would have higher prioritues to be completed if presented with the opportunity to do so.
The projects are the demolition of the YMCA building, the upgraded Westpark playground and repairing the leaking cooling system at City Hall.
Councillor Heather Eby, and former board member of the now defunct YMCA, said deferring the demolition of the Y's former Fairford Street East flagship location might make sense financially but given the poor economy a low bid might be possible.
“I do think that is something worth keeping on the table if it works out that way,” Councillor Eby said.
Blais replied “if there wete some significant cost savings due to the timing it’s definitely something we can discuss.”
At the April 27th Council meeting Puffalt said the decision must be made regarding the outdoor pool, whether or not to spend four weeks to get it ready for the Summer.
If the outdoor pool is not readied for the season and restrictions ease to allow pools to be used Puffalt said the indoor Kinsmen Pool is presently undergoing its annual maintenance and will be ready.
On the issue of reverting from bi-weekly to weekly garbage collection earlier than the planned June 1st date Puffalt said it could be implemented if data showed more household garbage was being generated to warrant the increased $25,000 monthly cost.
It could be implemented by Administration without returning to Coumcil if it made sense once data was collected if it was warranted and needed, he said. So far Administration has made 106 operational changes without Council approval as the data showed it made sense.
“With Council’s guidance that they would allow us to make this decision we would do that but that is cost back in,” Puffalt said.
Councillor Crystal Froese said she would want it understood that the arms length third party groups are doing what they can given the effect if the pandemic on their activities.
“I think we are asking groups to take a look at their operations, the same as we are, to find cost efficiencies and what is really required this year,” Puffalt said.
Councillor Froese said the intent of the motion should not just be recovering finances but also supporting and helping the third party groups survive through the pandemic downturn.
“They are part of the fabric of our community and provide a very important part of quality of life,” she said.
Councillor Brian Swanson said he had some concerns regarding the “omnibus” nature if the motion being put forth as it eas a sweeping motion that encompassed 60 motions if it was part of Budget Committee.
“My experience tells me if a lot of these motions had come up at Budget Committee they might not have passed,” Councillor Swanson said.
Puffalt said Administration was looking to award tenders in cast iron. Buffalo Pound Water Treatment Plant, pavement and concrete with the passing of the motion.
“Some of these capital projects we need to get moving on them.”
In the end Council voted unanimously to approve the financial measures recommended by Administratuon plus eliminating parking meter fines, speaking to third party groups about potential reductions and to continue to lobby the federal and provincial governments to assist municipalities.