It may be a little early to start talking about next year’s city budget.
But this year … a year like no other … will have a profound effect on the 2021 budget. The COVID-19 pandemic has already put the city coffers into the red this year, to the tune of about $1 million per month. The question before city staff and council is how will pandemic measures affect next year’s budget.
City manager Kathleen Soltis, in a report to city council Monday, said the city was about $3 million overbudget at the end of June. The good news is actions the city has taken to reduce costs has helped and she projects the city deficit to be $3 million at the end of the year. The city’s reserves, which sit at $50 million, can be used to offset the deficit.
However, the question remains of what to do next year should pandemic restrictions remain as they are now.
“Given the city’s loss of revenues due to COVID-19, it paints a worrisome picture – i.e. the city’s 2021 budget deficit could exceed $6 million and, without significant actions being taken, a 5.63 per cent tax levy increase could be required to close the gap,” wrote Soltis in her report.
She recommends to council that it give staff direction to develop 2021 budget scenarios of a zero per cent increase, a one per cent increase, and a two per cent increase. At Coun. Kyle Sampson’s suggestion, they will add a 5.63 per cent increase scenario as well.
“We either need to raise taxes or cut services. That’s really the difficult choice we need to make,” said Coun. Garth Frizzell. “If we go up to a 5.63 per cent tax increase in 2021, while all this is still hitting, that’s going to hurt people.”