Fort St. John city council offered no solutions Monday to trim an estimated $2.8 million deficit and steer away from five years of predicted tax increases, but some had plenty to say about media headlines and taxpayers talking online about city spending.
The deficit was laid out in an Oct. 26 financial update, with operating revenues forecast to drop $3.9 million this year. The spending forecast hasn’t changed as much, down $1.1 million through the first wave of the pandemic, and now into the second under a newly-elected BC NDP majority.
“This created quite the stir on social media. I think that people don’t realize that this is a deficit, not a debt,” said Mayor Lori Ackerman.
Said Coun. Trevor Bolin: “It’s the way the story is portrayed. And that’s the problem, when the media throws it out with one little headline,” he said.
“When a person looks into the fact that it’s revenue from our own sources, it’s gaming revenue, it’s everything that we’ve lost during this pandemic — that communities have, that provinces have, that countries have, and people have.
“Now, it’s about … mitigating that damage and moving forward,” Bolin said.
Ackerman elaborated further, and insinuated other municipalities in B.C. weren’t providing public budget updates.
“One of our values is transparency and we’re giving them the facts. Nowhere on social media did I see a professional that understands accounting lighting their hair on fire,” Ackerman said.
“You won’t see this coming from other communities because they don’t maybe have the transparency that we do, where we’re putting it out there for people to know and understand.”
She added: “I’m perfectly fine with the way it is.”
Budget manager David Joy’s latest update is on par with his earlier outlook given to council in March, when he forecast revenues would be down by $3.8 million by the end of September, but with spending down in lockstep by $4.3 million for a small surplus of $513,199.
Joy told council Monday that he’s confident in the accuracy of his latest forecast, though city finances won’t be finalized until year end in April.
“I don’t think it’s going to be any worse than what you see. It may come in better,” Joy said.
“But it’s important for the general public to realize, and for council and administration that … we have budget challenges ahead of us.”
Joy has repeatedly warned council about looming budget challenges, most recently in January, when he reported that city spending has outpaced flatlined revenues the last four years. He predicted deficits would deepen over the next five years and that significant tax increases would be needed if the economy didn't improve, before the pandemic was even a problem.
In 2019, he warned that future staffing costs and workload pressures would mount beyond 2020 to carry out the city’s strategic plan.
A tax increase was on the books this year to cover an earlier deficit projection of $214,000, though it was later cancelled to relieve ratepayers after the pandemic was declared.
Joy said Monday that city is “financially healthy” enough to “sustain the pandemic.” But he’s recommending the city borrow from its capital reserves to pay off the increased deficit.
That means future tax increases — 1.6% annually for the next five years, according to the report.
“If we use these reserves to mitigate our deficit it also means we have to recover those reserves in future years, and that requires raising tax revenue,” he told council. “It’s a heads up. It’s an awareness.”
The city's revenues for its operating budget are made up of property taxes, grants, the sale of services, investments, and other transfers.
Nearly all city taxes have been paid this year, and the city expects other government transfers to remain close to budget.
Most of the predicted deficit, $2.33 million, is being blamed on the pandemic, cratered in large part by a sharp drop in rec related fees and grants, after facilities were closed for six months before reopening in September. The North Peace Arena remains closed, despite high demand from sports groups.
The city expects to be short $720,000 this year from community gaming revenues as the casino also remains closed, and which pays for the Pomeroy Sport Centre.
“We have no idea that maybe the government might sit down and compensate those communities down the road,” Coun. Tony Zabinsky observed about the casino closures.
Investment income is predicted to drop by nearly $500,000 though Joy attributes just half of that to the pandemic.
The overall spending forecast meanwhile has budged just over $1 million, and Joy provided plenty of line item details in his report.
Wages and benefits are down $269,244, and though personnel costs are down due to layoffs, the city’s overhead administration costs are up by $455,000.
Overtime is forecast to nearly double, from $798,000 to $1.46 million.
Another $120,817 in other payroll expenses have been incurred, and the city had to transfer $550,000 from its contingency reserves for two executive severances.
The city confirmed to Alaska Highway News last week that Moira Green, general manager of community services, and Stacey Miranda, director of facilities and grounds, are no longer employed, but gave no further comment.
Expenses for contractors and goods and supplies are down marginally from the spring budget, down $313,161 combined, though higher than Joy’s initial readjustments for the fall.
The city expects to take an extra $373,000 hit for RCMP costs this year. Joy noted his concerns with the RCMP’s invoicing, which “don’t have any detail," he said.
“I need to question why the RCMP costs are going up,” Joy said. “What they’ve told me is the vacancies are down.”
Ackerman said larger cities like Prince George, as well as others across northern B.C., are paying more for RCMP too.
“We’ve dug through RCMP costs and how they’re funded,” Ackerman said. “Not that we begrudge them their operational costs, but it’s how it's paid for, and how the complement of RCMP is managed provincially.”
The budget for other unspecified contract services remains the same at $4.9 million, and the budgets for electrical, mechanical, and plumbing contracts remain unchanged.
Contracts for "organizational assistance" and annual licensing haven't changed from $678,900.
The city expects to pay $95,000 less in the new employer health tax than was expected, and the cost for the city’s telephone bills are up $37,000, while office supply spending is up $4,600.
The city has completely eliminated the budget for tree planting, and has forecast just $131 in spending on community beautification.
The city has upped the budget for the Santa Claus Parade by $245, to $14,845.
Elsewhere among the line items, staff training budgets are down $141,500, and employee recognition spending has been cut by half.
First aid and PPE supply budgets are up $85,000. Budgets for chemicals is up $93,000, and budgets for maintenance materials are up $109,000.
Joy notes that city receives $30 million a year in provincial grants through the Peace River Agreement to help float its capital and operating budgets, and by extension its reserves. The pandemic will impact the city’s finances into 2021 and perhaps into 2022, he said.
“We should never take those grants for granted,” he told council.
“But we are in a good position to be able to use those reserves … to offset such an extraordinary event as the pandemic is. And moving forward, adjusting our budget, especially since it’s likely the pandemic will continue until people are fully vaccinated, and that may take another year and a half, we’re facing 2021.”
Coun. Zabinsky called Joy's forecasts “an estimate,” and said they were not the “doom and gloom” that was anticipated.
“For a community of our size to be where we are, I have to thank the prudency of all the staff and what they’ve done,” Zabinsky said.
Couns. Gord Klassen, Becky Grimsrud, Lilia Hansen, and Byron Stewart made no comment during the 12-minute discussion.
Ackerman ended the discussion with an aside about the provincial government.
“I would hate to imagine if transparency was not one of our values what we would be able to shove under the rug," she said, before adding, "like a provincial agency."
Read Joy's full report to council below:
Email Managing Editor Matt Preprost at firstname.lastname@example.org.
[Eds. note: Adds links, details from city budget documents.]