The City of Yellowknife has been enjoying stable finances since the new year, but council will have hard decisions to make as it considers fulfilling plans for 2020 due to the Covid-19 pandemic.
Sheila Bassi-Kellett, senior administrative officer, and Sharolynn Woodward, director of corporate services, provided council the results of the 2019 audit as well as what can so far be expected in the city's fiscal picture for the rest of the year during Monday's government priorities committee meeting.
Bassi-Kellett said the city is in a positive situation with a $6.7-million surplus.
"The audit shows that the city is in a reasonably stable position financially after a year of better than anticipated revenues," she said. "We saw that as a result of higher land sales. We had some better than expected investment income. And we also know that we have some lower than anticipated expenditures that happened in 2019. And those were particularly in the areas of salaries and wages and contracted costs.
"This puts us in a fairly good position to manage the volatility of the year ahead when we know there are going to be significantly decreased revenues from taxes and fees and increased expenditures in some areas where mitigation is really expected."
Administration is recommending that surplus money remain in the general fund so that the city can use it for short-term needs stemming from the pandemic.
However, long-term pressures remain.
"We have a number of significant capital projects potentially on the horizon, (including) a potential aquatic centre, the replacement of the water intake line, some big projects that are reflecting essential services like the replacement of the sewage force main," Bassi-Kellett said. "So, if we have more money in the bank for that, that's ultimately going to be good for taxpayers in the long run."
Sharolynn Woodward, director of corporate services, said in a Financial Overview presentation that typically after a budget is passed and a surplus is found, extra money is transferred to the capital fund.
This year was different due to the pandemic.
"That was our instinct to (put surplus funding into the capital fund) for the 2019 surplus -- make sure that we have a bit of an external or enough, even for all these big projects," she said. "However, prior to having to make that final decision, we started to be aware of pretty significant impacts that Covid-19 was having on us and on our community. Therefore we recommended that this remain in the general fund, largely in case we need it to make ends meet this year."
Financial planning update
Woodward said based on expected revenue for 2020, the city was expecting to be in a solid fiscal position to pay down debt, retain money in the bank and put some money toward big capital projects like the aquatic centre.
Those expectations "dropped significantly," after the municipality responded to the pandemic on March 18 by closing its facilities, waiving penalties and late fees and offering free transit and free parking.
"When we saw the NWT border close three days later, this action amplified all of the impacts that we're probably still reeling from," she said, noting that the city heard complaints from residents unable to pay bills and businesses questioning their viability.
Some costs were spared as facility closures meant operating and maintenance costs as well as casual staffing were lowered or eliminated. Other items saw an increases in expenditures such as staff overtime, costs in new software and productivity due to having remote workers and items becoming more expensive such as personal protective equipment and hand sanitizer.
Looking ahead, Woodward said council will need to "balance the short-term pressures we are now facing with the long-term sustainability and stability needed to ensure we can continue to provide essential municipal services."
The city is forecasting the fiscal picture around three assumed scenarios in which the municipality's services will resume on either July 1, Sept. 1 or Jan. 1, 2021. In each scenario, services will return to normal with facility rentals, parking and transit fees all providing revenue again.
Interest and penalties would be waived until 2021 for each scenario.
Coun. Robin Williams said he wants to provide residents some tax relief with the city's surplus.
"I can certainly respect the position to plan for 2021, however, I feel that we should be focusing on what some of the realities of 2020 are and the the ability to actually execute upon that plan," Williams said. "And if we know at early stages that we're simply unable to fulfill our wish list (for 2020), I really would as a councillor like to advocate for the tax base in Yellowknife. I'm hoping that the consideration of tax relief is something that administration is considering."
The 2019 audit and the proposed scenarios will be finalized by council at a later date.
Financial outlook: Important numbers
Woodward's presentation noted that the city had budgeted at the beginning of the year various streams of revenue. It is uncertain how much will be lost due to the pandemic. Among the items:
Facility rentals - $1.3 million budgeted
Program registration revenues - $877,000 budgeted
Parking metres, permits, tickets - $1.1 million budgeted
Transit - $385,000
Interest on overdue payments - $300,000 from penalties on property tax
Bingos - $160,000
Utility payments - $87,000
Property taxes needed to balance budget: $31.4 million ($1.3 million lower than normal: $2.6 million outstanding as of March 31)
Utility bills: $1.6 million to water and sewer - $1.9 million balance on utility bills
Woodward said there's also expected to be losses in development and building permits as well as business licence renewals.