COVID-19 costing millions in shortfall; Regina council to debate financial options

The response to COVID-19 is costing the City of Regina millions of dollars in revenue, which is why city council is holding a special meeting on Wednesday to decide how to manage money through the outbreak.

After closing all recreational facilities, cancelling transit fees, slowing down the collection of fines for things like parking, and allowing deferrals for taxes and utility payments until September, the city is facing significant revenue shortfalls.

Unlike the other two levels of government, municipal governments are not allowed to operate at a deficit, so the city must find a way to balance the budget by the end of the year.

Mayor Michael Fougere said raising taxes is not even up for consideration.

“That is off the table. This is not a time to raise taxes. We have people who have lost businesses, people who are unemployed, our economy is slowing down, we’re seeing a tremendous loss in GDP, unemployment is significant around the country and in Saskatchewan and in Regina so that is not on the table. We are not raising taxes,” Fougere said Tuesday afternoon.

Just how big the financial hit will be depends on how long restrictions last, with the city forecasting a loss of $7.7 million if restrictions are lifted as early as April 30, $12.1 million if they’re relaxed by June 30 and $20.7 million if they last until September. These scenarios are laid out in a COVID-19 Financial Update report on the city’s website.

Speaking to reporters on Tuesday in advance of the special council meeting, the mayor assured the public that council will find ways to make up for the gap in revenue, most likely by looking at moving money from capital projects to cover operating costs for essential services like police, fire and garbage pickup.

“This is a once-in-a-generation problem we have of this significance and our financial viability is critical for us,” Fougere said.

The mayor said some of the recommendations in the report make a lot of sense and others are debatable, but at the end of the day council will decide how to find savings and manage money in a sustainable way.

Nine road construction projects have been recommended by city administration to defer to next year in order to save $6.4 million. Five of those streets were set for complete rebuilds, which would include temporary water hookups requiring contractors to go into people’s homes.

The road rebuilds on hold until next year include Academy Park Road, Procter Place, Calder Crescent, Chisholm Road and Fourth Avenue North. Delayed repaving or rehabilitation projects include Centennial Street, Kutarna Crescent, Willowview Street and McTavish Street.

The report already accounts for savings on salaries from layoffs of casual staff as well as fuel savings on bus services scaled back to Saturday schedules.

It also outlines several cost-saving measures the city is currently taking to reduce operating costs, such as imposing a hiring freeze with exceptions for essential workers, and paring down consulting and contracting services.

City administration is also recommending scaling back on spring street sweeping to only cover major roads and delaying plans to expand transit services to the airport. The report also suggests redirecting money from the traffic infrastructure renewal program and the recreation and culture capital program.

Money may also be taken out of the winter maintenance program to direct towards costs of the COVID-19 response.

In addition to these measures, Fougere also said council may consider dipping into the city’s reserve funds.

“We do have reserves for really outstanding, difficult and surprising circumstances and I think that a pandemic sort of fits that definition,” Fougere said.

Regina Exhibition Association Limited (REAL) is asking city council to approve an extra line of credit in order to manage its own operating expenses through the end of the year.

Since REAL depends on large events to make money mainly through the summer and fall, the financial picture looks grim. Based on the current projections, REAL will run out of cash to pay bills and payroll by early May.

City council will also have to approve the 2020 property tax bylaws along with looking at amending the Housing Incentive Policy to help builders develop new affordable rental housing.

This is Andrew Stevens’ first term on Regina’s city council, but this is his second emergency budget to deal with.

The first was in 2017 when the city had to make some big changes in response to a big drop in provincial funding. There are some similar circumstances now, according to Stevens, except in 2017 the city could raise the mill rate to help make up the shortfall.

“It’s never good when you have to open up a budget and make cuts and defer important capital projects,” he said.

Stevens called the situation saddening and, a few hours before the meeting started Wednesday, said he was still mulling things over with regard to specific projects.

“There are very small projects that we’ll have to defer. There’s a collection of cuts that we’re going to have to make this year (and) things that we’re going to have to push to the end of the summer,” said Stevens.

Stevens isn’t a fan of cancelling a bunch of recreational projects. Some citizens have floated the idea of stopping work on Maple Leaf Pool.

“We can’t just be about roads and potholes. Regina has to be a place people want to live in and it has to be a place people want to enjoy outdoors for the summer months,” said Stevens.

The decision-making on Wednesday is really about mitigating the impacts in the short term, according to Stevens, and he said who knows what this is going to hold for future budgets.

“What we don’t spend today we then tack onto the costs for subsequent budgets. So sadly we’re in a position, in many respects, where we have to kick the can down the road and we want to make sure, at the very least, that we don’t kick it down too far,” said Stevens.

Looking at specifics, Stevens doesn’t like the idea of clawing back street-sweeping, saying it’s an aesthetics thing but also debris in the streets could create a real problem for drainage.

Stevens is also looking ahead to things that haven’t happened yet. The CFL hasn’t announced any cancellations yet, but Stevens is wondering what will happen if the Grey Cup game and festival in Regina are cancelled.

The group in charge of Evraz Place and the city rely on the money coming in from the festival and ticket sales at Mosaic Stadium, said Stevens.

As for the city’s response to COVID-19, Stevens praised the city administration.

“The city has done an incredible job with regards to food security and working with the province and community-based organizations to deal with housing insecurity, shelter space, and making sure that food is delivered to communities,” said Stevens.

“The city staff cobbled something together incredibly fast and super effectively. And what I’m hearing in the community is the staff who are tasked with that really deserve a gold star and special recognition.”

— With files from 980 CJME’s Lisa Schick