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Council must heed financial wake-up call – Winnipeg Free Press

Council must heed financial wake-up call – Winnipeg Free Press
Council must heed financial wake-up call – Winnipeg Free Press

Opinion

The City of Winnipeg’s finances are in such dire straits that City Hall is barely able to maintain the financial cushion it traditionally relies on to balance the books in lean years.

In fact, the balance in the city’s financial stabilization reserve – the so-called emergency fund – is now in danger of being completely depleted.

The City Council requires the fund to maintain a balance equal to six percent of the operating budget. The city is also required by law to balance the operating budget each year.

WAYNE GLOWACKI / FREE PRESS files

The city’s emergency fund is in danger of running out.

It relies on the reserve account to cover any operating deficits so that the fund can be replenished in future years.

City Hall has been able to do that most of the past few decades. But it has become increasingly difficult as the city struggles to cover rising costs, largely through property taxes that do not grow with the economy.

The COVID-19 pandemic has been particularly tough on the city’s finances, as revenues have fallen and costs related to the public health emergency have risen. The city has never fully recovered from that financial crisis and now risks running out of funds.

If that happened, the city would no longer have the financial buffer it once had to cover future shortfalls.

This should come as no surprise to anyone who has followed the city’s financial crisis over the past few years. The city does not have the growth revenues needed to cover its rising costs. Eventually, the city and county governments will have to confront this worsening problem and develop a new financial deal for the city.

There is $31.7 million in the city’s 2024 rainy day fund, well below the required balance of 6 percent. That would not be enough to cover this year’s projected $39.3 million deficit. City officials announced plans last week to close that shortfall.

As in most years, the deficit is expected to shrink by the end of the year. It is possible, and even likely, that it will shrink enough to cover the deficit with the emergency fund. But what about next year and the year after that?