COVID-19 closures and reduced service levels in Owen Sound are expected to create at least a $1-million shortfall in the city's 2020 budget.
Councillors received a report from the city's Director of Corporate Services Kate Allan Monday that estimates the operating impact will be $1.06-million, assuming reduced levels of service persist through June and operations begin to return to normal around July 1.
Allan's recommendation is to reduce the city's 2020 capital program by $656,000, while covering the remainder of the deficit with reserves or other surpluses not currently anticipated.
More than 20 capital projects budgeted in 2020 are being recommended for deferral by staff. Harrison Park bridge maintenance ($75,000), facility upgrades ($60,000) and the city hall roof ($55,000) are among them.
Council has not approved any project deferrals yet.
“At the time of writing this report, with the planned efforts considered, there will not be a deficit requiring funding from future years or other sources not currently under the financial oversight of city council,” Allan's report explains.
Owen Sound Mayor Ian Boddy says the city started off just trying to react to everything that was going on with COVID-19, and now they're at a point of measuring the effect on the city's finances.
“We know it's been devastating for business,” Boddy says. “Our next steps going forward is to take that information and decide how to move forward with it.”
The biggest chunk of lost city revenues is expected to be from program and facility bookings. Allan's report forecasts about $500,000 in revenues will be lost, with the expectation half of projected incomes will return in July while normal bookings will resume in September.
Another major area of revenue decline is from garbage bag tags. The city has not been enforcing use for pick-up during the COVID-19 pandemic. This is expected to result in $100,000 in lost revenue through the end of June.
Campground revenues at Harrison Park are also expected to decline at least $150,000. More than $180,000 is expected to be lost due to deferring tax payments and waiving penalty/interest on utility and property taxes through June.
The $1-million-plus shortfall projection comes even with several hundred thousand dollars of savings anticipated in several city departments from staffing considerations including layoffs and unfilled vacancies.
Owen Sound issued temporary layoff notices earlier this month to 47 full-time employees, while seasonal staff and summer students will not be recalled.
Savings from layoffs, unfilled vacancies and reduction in staffing related costs in the city's community services department is expected to offset around $250,000 in lost revenues in the 2020 budget. Allan's report explains the most significant savings are coming in facility maintenance and parks wages, which will result in a “noticeably” lower level of service through the spring months.
Corporate services layoffs and unused budgets will also allow another $200,000 to be offset, while operations and engineering staff related impacts will result in more than $300,000 in savings.
City council will receive an updated COVID financial forecast on a quarterly basis, as timelines change and become more clear moving forward.