COVID grant to cover city's budget shortfall

Fort St. John will use $3.7 million in COVID-19 recovery funding to cover this year’s budget shortfall, eliminating the need for potential tax increases.

The city was forecasting a $2.8 million deficit this year, mostly due to the pandemic. But the package of federal-provincial funding announced last week will cover those losses, with the rest to be carried into next year’s budget.

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“The province created a formula to provide relief to the municipalities thinking we would be in worse shape than we are,” Mayor Lori Ackerman said Monday.

“Really, that is in thanks to council and staff for really holding the line on our expenses, and how we’ve incorporated plans to ensure that the public health orders were in place, and listening to the concerns of our residents and trying to do everything we possibly could within those public health orders.

“As tough as it’s been, we’ve held the line and made sure that our staff and our residents are safe,” Ackerman said.

The federal government announced in July it was sending $19 billion in funding to the provinces and territories to help refuel their economies during the pandemic. The program included $2 billion earmarked to support municipal operating costs for a six- to eight-month period.

Eligible costs for the funding include revenue shortfalls, facility reopening and operating costs, emergency response costs, bylaw enforcement, fire and police services, and aid for vulnerable persons.

Most of the city's predicted deficit, $2.33 million, was caused by the pandemic, and cratered in large part by a sharp drop in rec related fees and grants, as well as other revenues from gaming and utility fees.

City budget manager David Joy says if his forecast holds, the city will apply $2.4 million against the grant to cover the pandemic related losses. The remainder would be carried over to cover impacts in the 2021 budget.

“I’ll have a better idea in January and a final idea come April once we complete the external financial statements,” Joy said.

Before the grant, the city had been looking to draw on its capital reserves to cover the deficit, which would have needed five years of tax increases to pay back. Ackerman and Joy said the city was able to look at that as an option because of its financial position and amounts of reserves.

"That’s off the table now," Joy said, calling both 2020 and 2021 "extraordinary" years. 

"My concern now is more budget-related operating costs, and what we need to get corrected," he said.

Whether the city will see any further COVID related relief from senior governments remains to be seen.

“Those are political decisions at those levels. As soon as we know, you’ll know,” Ackerman said.  

Joy said there remains some uncertainty for tax revenues next year, but said the city is capable of withstanding another year or two of COVD-related disruptions.

“For a city our size, the amount of reserves we have is very healthy," Joy said.

"We’re using some of those reserves this year for our capital program, but even after that we still have sufficient reserves to withstand extraordinary events such as what we’re facing here."

City of Fort St. John - COVID-19 Safe Restart Grant by AlaskaHighwayNews on Scribd

— with files from The Canadian Press

Email Managing Editor Matt Preprost at editor@ahnfsj.ca.

© Copyright Alaska Highway News

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