The City of Fort St. John is forecasting an operating deficit of $2.8 million this year due to the pandemic.
A financial report going to council Oct. 26 notes the pandemic is “now likely” to impact the city in 2021 and 2022.
“2020 has been a difficult year across the board and the pandemic has had a substantial negative impact on both revenues and costs which are projected to put us into a deficit situation,” notes CAO Milo MacDonald.
“This impact is likely to be extended well into the recovery and will require careful forecasting and monitoring.”
Of the projected deficit, corporate services manager David Joy notes that $2.3 million is directly related to the pandemic, while $500,000 is due to this year's approved operating budget.
“As permitted by the Province, the deficit related to the pandemic can be offset by borrowing from capital reserves and paying ourselves back over 5 years. This would require a modest 1.6% increase in the tax rate annually for next 5 years,” Joy notes in the report.
“For the deficit related to the budget, the overtime, return on investment and increased RCMP costs would require finding additional revenue or reducing expenses for the 2021 budget and, worst case scenario, it represents a possible 5.3% increase in the tax rate unless assessment values and/or the tax base increases. Some of this expense can be mitigated by utilizing the tax stabilization contingency reserve until further net cost efficiencies can be found in subsequent years.
“Of course, any use of a contingency or capital reserve to offset a pandemic related deficit, to moderate a tax rate increase and to fulfill employment agreement obligations, will require replenishment in subsequent years, 2021 to 2025, that can only be done by increasing tax revenue.”
Joy notes the city has collected 98% of its budgeted tax revenue for the year, and "was not affected as much as was originally anticipated."
Read the report in full below:
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