The City of Prince George will consider amendments to the 2020 budget as a result of the COVID-19 pandemic, which is expected to cost the city almost $912,500 per month.
The proposed changes will be debated at a special standing committee on finance and audit meeting on Monday. The recommendations of the committee will go before city council on April 27, and could be formally adopted by council as early as the May 11 city council meeting.
"The costs that we're incurring in dealing with COVID-19 are increasing all the time," committee chairperson Coun. Garth Frizzell said. "In addition to the direct costs, we have the loss of revenue on the other side."
A city staff report to the committee estimated the city is losing $1.248 million per month in revenue, offset by $335,500 in operational savings.
The biggest hit to city revenue was the closure of civic facilities like pools, arenas and the Prince George Civic and Conference Centre, which cost the city $580,000 per month in lost revenue, partially offset by a $165,000 in savings in wages for 100 part-time and casual staff at the facilities who are not being scheduled.
The city also receives 10 per cent of the Treasure Cove Casino's net income. With the casino closed, the city expects a $225,000 loss per month in gaming grants.
The city's development services department has seen revenues drop by 50 per cent as construction projects get put on hold, costing the city $130,000 per month, and off-street parking income has dropped by $160,000 per month.
Other sources of lost revenue included lower return on investments, lower revenue from bylaw enforcement, parks rentals, free fare on city busses, and lower water and sewer revenue from metered businesses.
The city's saving came from lower fuel costs, the cancellation of non-essential business travel, not filling 13 public works summer jobs, a hiring freeze on non-essential job vacancies and the cancellation of a 1.75 per cent cost of living increase for union-exempt staff.
"Remember that municipalities are providing those vital services: water, sewer, roads, police. Those will carry on," Frizzell said. "This is unprecedented, and we're working our way through."
RELIEF FOR RESIDENTS
The committee will debate the deferral of $24.8 million in capital projects that were scheduled to happen this year to next year. The move would free up funding, and allow the city to use the $8.1 million Northern Capital Planning Grant to pay off over $7 million in outstanding debt for the replacement of the Willow Cale Bridge and the repair of the massive Winnipeg Street sinkhole.
There is no penalty for repaying the two short-term loans, which would save the city more than $1.3 million in debt-servicing costs. That change would allow the city to reduce the overall tax increase in 2020 from 3.44 per cent down to 2.22 per cent – a savings of about $27 for an average Prince George home.
The committee will also consider a recommendation to council to eliminate the 10 per cent late payment fee on water, sewer and garbage utility bills for the second half of the year. Those payments are typically due in October.
However, postponing the property tax deadline of July 3 is not on the table. The city is collects property taxes on behalf of the hospital, school district, regional district, Municipal Finance Authority and BC Assessment, and is required to pay those amounts by July 31.
If the deadline for the City’s property taxes was delayed further than July, the city’s cash flow would be severely compromised when remitting the necessary July payments, coupled with the added risk of high delinquency of this year’s collection," the staff report to the committee says. "Unless the province extends their remaining July 31st remittance deadlines or provides a 'backstop' to municipalities for uncollected property tax revenue, it is administration’s recommendation to not defer property taxes."
Property taxes are such a significant portion of the city's revenue that "without a backstop, we can't do a later date" without risking running short of funding to continue offering essential services, Frizzell said.
RELIEF FOR MUNICIPALITIES?
On Thursday morning the provincial government announced relief measures aimed at helping municipal governments get through the COVID-19 pandemic.
Local governments will be allowed to borrow money, interest free, from their capital reserve funds to cover temporary shortfalls in revenue. That money will have to be paid back to the reserves within five years.
Municipalities will also be able to use the school tax revenue collected for the province until Dec. 31, when it will have to be paid to the province. For the City of Prince George, that amounts to an estimated $28.9 million, according to city staff's report.
And municipalities will be allowed to extend their borrowing from the Municipal Finance Authority from one year to two years, for money borrowed in anticipation of tax revenue.
"If communities are in dire straits, this could be helpful for them," Frizzell said. "In the initial review of it... it's not something that's going to change us dramatically at first, at least not in terms of what we're considering on Monday."
What would be more helpful for cities like Prince George is help covering some of the day-to-day operational costs, and especially the backstop funding to assist with uncollected tax revenue, he said.
"If the provincial or federal government were able to offer help on that front, we would be able to look at deferring taxes," he said.
Coun. Kyle Sampson said he also doesn't see a lot of new tools the city could use in Thursday's announcement.
"I think, unfortunately, the measures that have been put in place from the province and federal government are great, they aren't really helpful for a city like Prince George," Sampson said.
Mayor Lyn Hall said while the province made some big announcements on Thursday, it amounts to "one step forward, and two steps back," for the city.
The city's finance and audit committee meeting will take place on Monday, starting at noon. The meeting is closed to the public, because of the city's response measures to the COVID-19 pandemic, but will be streamed live on the city's website.
"It's been one of the biggest conversations I've been part of since I've been on council," Frizzell said. "I've heard lots of different ideas coming from members of council. I expect there will be some good discussion on Monday, and again at city council."
REGIONAL DISTRICT STAYING THE COURSE
While cities have until May 15 to approve a final budget, regional districts are legally required to pass their final budgets by the end of March, Regional District of Fraser-Fort George chief administrative officer Jim Martin said. So reopening the district budget is not an option, without legislative change from the province.
"We're actually in a pretty healthy position," Martin said.
During the 2008-09 financial crisis, the regional district ended up facing an approximately $750,000 operating deficit in its solid waste services, he said. Since then the district has been building up its operating reserves to ensure it could weather another event like that one.
"There was some significant planning done then, that has put us in a good position," Martin said.
However, the district is looking at its list of capital projects and considering what impact the pandemic will have on them. Some may have to be delayed, but many of these projects will create local employment at time when so many people are out of work.
"It's really important to us to support the local economy," district chairman Art Kaehn said.
How the district's operations are impacted by the provincial measures will depend, in a large part on the impact on the municipalities – including the City of Prince George – are impacted, Kaehn said. The regional district doesn’t collect taxes in its own right, but relies on municipalities to collect them on its behalf.
"Come Aug. 1, as long as the province is able to ensure the rural share of municipal tax dollars gets paid, we'll be alright," Kaehn said.
