Funding plan proposed to cover preliminary 2022 year-end deficit

As it faces a preliminary deficit of just under two per cent, the City Administration has recommended a strong financial plan to offset the shortfall. The plan is outlined in a report to be presented on March 8 to the Standing Policy Committee on Finance. Under provincial law, municipalities are not allowed to operate with a deficit.

The 2022 preliminary year-end financials show a 1.94% deficit ($10.99 million) in the civic operating programs and a 0.84% surplus ($3.16 million) in the City’s utility programs, before the year-end audit confirmation. The report also highlights $3.25 million in Administration savings.

The preliminary year-end deficit includes $1.97 million of expenditures related to the December 2022 Snow Event. 

“We knew early in 2022 that a significant deficit was possible.  The Administration brought forward a comprehensive plan to City Council in early 2022 which included spending decreases and anticipated funding sources for a projected deficit.  The strategy we are putting in place now is based largely on the plan prior approved by Council in March 2022” says Kari Smith, Director of Finance.

The key variances by business line and service line are highlighted in Appendix 2: Detailed Overview of Preliminary 2022 Year-End Financial (Mill Rate) Results.

Administration is recommending the City’s remaining deficit of $9.02 million, after deducting the $1.97 million borrowing for the December 2022 Snow Event, be funded by:

• Waiving the transfer to reserve for the following items:
  • $14,220 to the Internal Audit Program Reserve;
  • $17,659 to the Animal Service Reserve; and
  • $173,247 to the Reserve for Unexpended Youth Sports Subsidy Funds.
• $710,740 reduction in the transfer from the Roadways Operating program to the Paved Roadways Infrastructure Reserve;
• $500,000 to be transferred from the Special Events Reserve - Profile Saskatoon;
• $924,395 to be transferred from the Land Operations Reserve; and
• $6.68 million to be transferred from the Fiscal Stabilization Reserve.

“The City continued to face significant inflationary pressures in 2022 and although some non-tax revenues like Transit Operations were higher than budgeted, other areas like Parking and Leisure Centres were lower with all three of these areas lower than pre-pandemic levels.  Favourably, several of our business and service lines achieved surpluses in 2022 including our Waste Services Utility and Saskatoon Light & Power,” Smith adds.

2022 Preliminary Year-end Utility-Related Program results

• Waste Services Utility reported a surplus of $ 1.79 million
• Saskatoon Light & Power (SL&P) reported a surplus of $1.22 million 
• Wastewater Utility reported a surplus of $1.08 million
• Storm Water Management Utility reported a surplus of $657,233
• Saskatoon Water Utility reported a deficit of $1.59 million 

Throughout  2022, the City Administration looked for several ways to keep costs down on training and its discretionary spending. Through these measures, City staff found one-time savings of $3.25 million through reduced staff training, materials, office supplies and discretionary hiring decisions.  The Administration reduced these expenses with an across-the-board directive for all departments due to lower revenues and other budgetary pressures the City experienced such as higher fuel costs and overall inflation.

Strong financial management will continue to support planning for a bright future

The City’s financial standing continues to be strong and sound overall, with its ‘AAA’/Stable credit rating reaffirmed for the 21^st consecutive year by S&P Global in January 2023. In planning for a bright and sustainable future, the City is committed to making City operations more efficient every year, creating greater ongoing savings across the organization and managing inflationary pressures.

The external audit of the 2022 financial statements is expected to be completed in June 2023. Following the external audit, the audited financial statements will be presented to City Council for approval.  At that time, the year-end financial results will be confirmed or adjusted based on the recommendations of the external audit and presented in the 2022 Annual Report which will be made available online later this year.

For more on the City’s Budget and Finances, visit saskatoon.ca/finance.