City of Saskatoon Preliminary 2017 Year-End Financial Results
After a number of unexpected budget challenges last year, the City’s preliminary year-end financial results for 2017 indicate a deficit of $3.10 million, prior to year-end external audit confirmation.
“Our goal is to deliver a balanced budget every year through our planning and ongoing management of civic funds throughout the year,” says Clae Hack, Director of Finance. “While an annual deficit of $3.10 million is not sustainable, unfortunately there are years where deficits occur. Importantly, there will not be a significant impact to the City’s finances or operations this year as a result of the deficit due to our practice of saving surpluses from previous years to help offset future deficits.”
The deficit represents a 0.65% variance from the City’s overall Civic Operating Budget of $477.6 million and is largely due to shortfalls within various operating revenues. “The City is facing significant non-tax revenue challenges as user fees and other forms or revenue have remained flat or decreased year over year,” says Hack.
Hack says revenues were $5.6 million lower than anticipated in the budget largely due to negative variances for waste handling, Transit, and parking fines and penalties (partially from better compliance).
While expenditures were $2.6 million under budget in 2017 largely due to a spending and hiring freeze, there were areas where expenditures had negative variances, as the City had to invest additional funds in several areas: street cleaning and sweeping because of extended program delivery, park maintenance and design because of dry conditions, and unplanned maintenance to repair aging infrastructure at civic pools, office buildings and various arenas. As a result of service level reports, budgets were adjusted in 2018 for street cleaning and sweeping and parks maintenance to align budgets with the cost of the delivered service levels.
“We’ve put strategies in place to assist in addressing these revenue challenges in a timely manner including looking into waste as a utility, phasing in decreases to revenue budgets to align with actuals, and future reallocation of parking meter revenue to offset the decrease in parking violations,” adds Hack.
In addition, SaskTel Centre and TCU Place had surpluses of $1.35 million and $1.04 million respectively, while the Remai Modern had a modest deficit of $20,700 that will be covered by a contribution from the Building Transition Fund.
All City utilities, including Saskatoon Light & Power and Saskatoon Water posted surpluses for 2017. As required by Council Policy, these surpluses have been transferred to the applicable Stabilization and/or Capital Reserve.
A number of recommendations on reserve adjustments to balance the 2017 budget are highlighted in a report which will be presented to the Standing Policy Committee on Finance at its meeting on March 5, 2018. The Committee will review the recommendations and put forward those they would like City Council to consider and make a decision on.
The report supports the Strategic Goal of Asset and Financial Sustainability by demonstrating how the City invests in what matters, and is committed to openness, accountability and transparency in the allocation of resources.