cgallant@medicinehatnews.com@CollinGallant
The impact of the coronavirus on the municipal operating budget was been $1.5 million to the end of April, and could rise to $2.3 million by year end, administrators told a city committee late Thursday.
That figure doesn’t include council reallocating $8.2 million from city reserves for business and charity sector grants and push the impact of a property tax increase in 2020 to next year.
It does include operational changes, as well as lost revenue and, in some cases, cost savings realized from closing city facilities when staff was laid off.
With officials stressing they hope to mitigate added costs, they said the city is still tracking to have a $500,000 budget surplus at year end.
“(In municipal services) we’re actually tracking quite closely to budget at (April 30),” said corporate services commissioner Dennis Egert. “But the total effect is $10.5 million.”
The city reports financial data three times each year, each time with updated results of changes to revenue and expenses, the “variance” or difference from the budget timeline and projections to year end.
Committee members questioned the accuracy of forecasts going forward, considering the unprecedented nature of the health emergency, or the rapidly changing pace of reopening regulations from the province.
“I’ve always appreciated seeing the year-end variance forecasts, but is this even fair?” asked Coun. Jamie McIntosh.
“It’s based on assumptions that the situation (in April) would persist to the end of the year, because we had no better information at the time,” said Egert, citing recreation facilities that will reopen over the next month. “There will be costs to reopen facilities and we’re not sure of what the revenue will be or what the uptake from the public will be.”
Internal forecasting takes place on a monthly basis, he added, and accounting manager Vanessa Bonneville told the committee, “As a response, several mitigation strategies and cost-savings programs were and are being initiated to offset the expenses in municipal services.”
In terms of direct costs, revenue essentially dropped to nil at city recreation and cultural facilities for six weeks captured in the report, but those typically operate at a loss, and expenses were lower.
The impact of closing the Canalta Centre, Rec facilities, like the FLC and, temporarily, city campgrounds, were a $3.5-million loss in revenue, offset by $3.77 million in lower expenses. That results in a net $295,000 gain.
Other facility closures at the Strathcona and Veiner centres and offering no-fare transit led to a $2.04-million loss in revenue only partly made up by $1.58 million in lower costs.
Coun. Phil Turnbull attended as an observer, and said the city’s mandate is to provide recreation opportunities, but residents should be aware of the cost.
“It will be an eyeopener,” he said.
Elsewhere, the report predicts the Medicine Hat Regional Airport will see a 75 per cent revenue drop, or about $750,000 less, due to vastly decreased air travel. The planning department expects $800,000 less in permit and licensing fees thanks to a slowdown in private sector construction activity.
A positive variance for fleet services expects to see the city gasoline and diesel costs fall $750,000 this year as prices have slid.
Added expenses included $377,000 for overtime and backfilling in the police and fire departments as staff isolated, and the direct cost of operating the incident command post, which directs city emergency activity, has been $474,000 over three months.
