At their meeting of the whole, senior staff shared with council the largely negative impact of the COVID pandemic on both the 2020 and 2021 budget.
While some of the numbers presented rely on Kawartha Lakes remaining at Stage 3 in the province’s re-opening plan, it is clear that projects from 2020 that have been rolled over into 2021 will impact the city’s ability to take on many new capital projects in the upcoming budget year.
Jennifer Stover, director of corporate services, began her lengthy presentation by dealing with the 2020 budget and where the city is with its cash flow. There was a concern that the city would be facing a cash flow crunch with significant lost and delayed income affecting the city’s ability to carry out necessary capital repairs. While cash flow was unpredictable at times, Stover shared that tax delinquencies are no higher in 2020 than they were in 2019.
Stover reiterated that regardless of lower-than-expected tax delinquencies, the city is still looking at $5 million in lost income largely because of lower user fees and pandemic related spending for the 2020 calendar year. With much scrimping and saving the city is still hopeful that the 2020 budget will come in as a net-zero budget as mandated by provincial legislation.
“If there are no more unanticipated pandemic related pressures we believe the city will break even for 2020,” Stover shared.
“If arenas are forced to close or if winter maintenance costs for November or December are high,” Stover said, “the numbers will have to be re-visited.”
For 2021, the city is projecting a 3 to 3.5 per cent increase in the tax rate with any money not already consumed by the operating budget going into capital reserves for pressing projects that will repair and replace city assets.
“We have been unable to keep the amount of money we want in the capital reserve,” Stover said, “because there has been too much pressure from the operating budget this year.”
“We have to balance affordability with what the budget needs,” Stover said.
Stover detailed that with $800,000 less coming from the province for Ontario Works, a $1.7 million increase in the winter control budget based on Environment Canada’s predictions for a difficult plowing season ahead, and with low assessment growth caused by municipal property inspectors not in the field because of COVID there are financial pressures for the city coming from multiple directions.
Councillors heard that the city is attempting to complete 115 projects worth about $32 million in the fall of 2020, while 33 city projects budgeted at $10 million have been deferred to the 2021 capital budget.
“We are still uncertain about the duration and extent of the pandemic,” Stover said. “Some projects are being finished late because of shortages of materials and constraints with human resources.”
Because of these projects either finishing late or being pushed into the next budget year, the 2021 capital budget which typically contains $50 million for infrastructure projects like roads, bridges and arenas will likely only contain about $25 million in new spending for 2021.
“This shortfall doesn’t include money set aside for COVID recovery or the Coboconk Wellness Centre,” Stover reminded the mayor and council.
“We will not have the resources to develop a typical capital budget,” Stover said.
Councillor Doug Elmslie began council’s questioning of Stover wondering why the city had budgeted for another water-waste water study when “we did one a couple of years ago?”
Stover reminded council that every five years Kawartha Lakes has to re-apply for its drinking water license and that re-application will be in 2021, hence another drinking water study.
Elmslie wondered if 2021 is the right time to be considering adding a fourth transit line in Lindsay. He also wanted to know what might be the budget impact for 2022 of that additional service.
“I think we should set the 2021 capital budget in November,” Elmslie said, “and then contemplate no more additions in the New Year.”
Councillor Pat Dunn wanted to know if the $10 million in uncompleted capital budget items were automatically rolled over into the 2021 budget, to which Stover replied yes.
Councillor Ron Ashmore asked if the city is having problems getting tenders out because of COVID, and if that was causing delays in projects getting completed?
“The city decided to slow down starting some projects because of temporary cash flow issues in 2020” she said, avoiding doing as much tendering in the process.
The budgeting process will begin in earnest starting Oct. 20 at the next regularly scheduled council meeting.