A fiscal update from the City of Yellowknife shows the administration expects its projected surplus for 2020 to drop by nearly half to $3.2 million.
Accountants updated city councillors with new projections for the year factoring in the impact of Covid-19 and the associated public health lockdowns and economic freeze-up at a committee meeting Monday.
When councillors approved this year's budget last fall, the picture was solid on the operating side, with a surplus of $5.7 million expected (the city's budget year coincides with the calendar year, so the second quarter ended June 30).
Now, the city has pared down its expectations for a number of revenue streams, including user fees collected from recreational facilities and bureuacrats are using terms like "extremely volatile" and "unprecedented."
It is expected that there will be a surplus of $3.2 million as a mix of assets and cash by the end of the year, about $2.5 million less than had been anticipated coming into 2020.
Senior administrative officer Sheila Bassi-Kellett and director of corporate services Sharolynn Woodward have been periodically updating council with fiscal updates, especially since March.
"So far in 2020, what our variance tells us is that the total revenues from things like property taxes, fees and charges, land sales, and things like that, these are projected to be $3 million less than budgeted," said Bassi-Kellett. "And at the same time, our total expenses are projected also to be half a million less than projected (equalling a net $2.5 million)."
Bassi-Kellett said that is owed to various reasons including the closing down of city operations. She said since the pandemic started, the city has largely been living off its savings.
"Now, we're depleting our bank account," she said. "And you know what? We're okay right now. But this is a signal that of course administration is taking very seriously that this direction that we're headed in if this continues on, this creates a huge issue for us. That of course, we will need to manage with council's guidance and oversight."
NNSL file photo
Mayor Rebecca Alty said that Covid-19 had been totally unexpected, but it is positive that council had a surplus cushion to prepare ahead heading into 2020.
"Our budget was all crafted in December of last year and we didn't realize would have this kind of impact," said Mayor Rebecca Alty. "So now the variance of forecast is now taking these new variables into consideration."
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Coun. Robin Williams was optimistic about the months leading into Budget 2021.
"I think there will be a lot of great discussions come budget time and I think if certainly, we are still in quite as strong a position for the residents of Yellowknife, you're still sitting, projecting a three, three-and-a-half million dollar surplus when all is said and done," he said.
Williams said he would like city staff to look at new strategies for city facilities to "incrementally getting some revenue back from those facilities in the next six months.
"I don't think the next six months won't be as bad as the first six that we just experienced, but I'm looking forward to budget 2021 and I think it is going to be a great time," he said.
Collective agreement
Earlier this week, city council approved a three-year collective agreement for its 200-plus member workforce, which will give employees a five per cent increase across those years.
A city employee told NNSL Media this week they don't have the breakdown of how much that would cost, however they stated in an email those figures were budgeted coming into 2020.
"The City of Yellowknife plans, budgets and manages its finances, including pay and benefits for its employees, within our overall fiscal framework," stated deputy city clerk Slavica Jovic. "Anticipated additional expenditures associated with the new collective agreement were included in the 2020 budget."
Monday's memorandum also stated that salaries and wages would be "lower than budget due to staff vacancies and reduced use of casual staff due to facility closures."
FACT FILE: Yellowknife city budget version 2.0 (as of June 30)
Surplus originally projected for end of 2020 – $5.7 million
Surplus expected with Covid-19 impact factored in – $3.2 million
Revenue – $3,014,000 lower than expected
Expenses – $519,000 lower than expected
Net loss - about $2.5 million
Key areas where revenue losses are expected – land sales ($1.3 million), user fees and sale of goods ($813,000), government transfers for capital projects ($788,000), fines, penalties and cost of taxes ($718,000)
Where most savings are expected – salaries, wages and employee benefits ($957,000), electricity ($208,000), fuel ($93,000), materials and supplies ($97,000), insurance ($65,000), mayor and council expenses ($30,000)
Key areas where revenue increases are expected: government grants ($712,000), investment income ($165,000)