Winnipeg, MB – The City of Winnipeg’s second quarter Financial Status Report cites a year-end projected deficit in the tax-supported operating budget (General Revenue Fund) totalling $8.2 million as at June 30, 2017 before using deficit elimination measures, and represents a $5.4 million improvement over first quarter projections. The year-end deficit is due largely to a transfer to Winnipeg Transit.
In separate reports for consideration at this week’s Standing Policy Committee on Finance (SPC-Finance), Winnipeg Transit is requesting an over-expenditure approval of $10.7 million and additional deficit elimination measures to partially fund its deficit, while Public Works is also requesting a net over-expenditure approval of $1.6 million.
In March 2017, a cost mitigation strategy was implemented to address the deficit in the tax-supported operating budget that included a hiring freeze, restrictions on discretionary departmental spending including the use of external consultants and conference related travel, as well as limiting other discretionary spending. These cost mitigation measures are projected to total $9.5 million in 2017 and contribute significantly to reducing the projected year-end deficit. Council has already approved a $4.3 million cash million reduction in cash to capital contributions and an additional $600,000 in transfers from other reserves to the General Revenue Fund.
In June 2017, a new collective agreement approved by Council with the Winnipeg Police Association, contributed toward $3.9 million in savings in the Winnipeg Police Service budget in 2017, but these savings are reduced to $1.9 million, in part due to lower provincial funding for the cadet program and police helicopter.
Contributing to the projected $8.2 million year-end deficit is a $10.7 million net deficit at Winnipeg Transit due to less than forecasted fare and other revenue, and a decrease in provincial funding contributions in 2017.
Transit is requesting over-expenditure approval of $10.7 million along with the approval of additional deficit elimination measures to help fund its deficit over and above those identified as part of the City’s cost mitigation strategy. It has identified approximately $6.1 million in changes to capital project budgets and a $1 million draw from retained earnings to reduce its remaining deficit to approximately $3.6 million. The department is continuing to evaluate other options to reduce the remaining deficit.
If the additional measures included in the Winnipeg Transit over-expenditure report are approved by SPC-Finance, Executive Policy Committee, and Council, the City’s forecasted deficit would be reduced to $1.1 million before other measures.
While Public Works is also requesting a net over-expenditure of approximately $1.6 million, it will not increase the City’s overall projected deficit. The other cost savings identified in the Public Works over-expenditure report totalling approximately $1.1 million are already factored into the year-end projections.
“The second quarter financial report reflects the continued impact of changes in provincial funding levels,” said Councillor Scott Gillingham, Chair of the Standing Policy Committee on Finance. “We expect departments to continue to control expenses in efforts to end the year in a balanced position.”
The Public Service anticipates that the projected deficit will decrease over the remainder of the year based on financial improvements typically realized from that forecasted to June 30, as well as through continued efforts to control expenses. The City’s second quarter financial update and the Winnipeg Transit and Public Works over-expenditure reports are publicly available through the Decision Making Information System (DMIS).