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Year-end options for cost reductions being considered to maintain balanced budget

For immediate release: August 10, 2022 - 4:30pm
CF22-3364

A mid-year forecast to be considered by the Standing Policy Committee on Finance shows that rising fuel prices and a snowy start to 2022 have contributed to a projected deficit within the City of Saskatoon’s 2022 Corporate Business Plan and Budget. 

As outlined in the information report being presented to committee on August 15, the City is currently projecting a 1.17% unfavourable variance from budget, or an approximately $6.8 million deficit.  

This is due in large part to higher than anticipated gas and diesel prices, which had a $3.5 million impact on the budget, and to high snow accumulations in the first half of 2022, which resulted in a projected $3 million unfavourable variance,says Kari Smith, Director of Finance.  

The projection also includes over expenditures in Information Technology, and various other revenue failing to reach budget, such as those for Fines and Penalties and Leisure Centres. 

The mid-year forecast does include several positive trends, notes Smith, including $2.5 million in administrative savings from reduced training and travel and staff vacancies, $1.05 million in higher than anticipated investment returns from rising interest rates, and a $1.13 million increase in Municipal Revenue Sharing. However, due to such favourable variances being used to offset the rising cost of fuel and other shortfalls, Administration is currently projecting an overall deficit of $6.8 million. 

Various year-end deficit reduction options of up to $4.2 million have already been developed and reported on, including a one-time increase to the Return on Investment from the Water Utility, returning capital funds back to operating as opposed to reserve, and deferring reserve contributions to mitigate the deficit. 

“The mid-year forecast is our best estimate of the 2022 budget position at this time and is still subject to substantial change throughout the second half of the year,” says Smith. “Administration will continue to monitor and manage the 2022 budget and do everything we can to reduce the deficit while still delivering the services Saskatoon residents expect. Although the City has reserves in place to cover a deficit of this magnitude, our goal for 2022 is to avoid leaning on our fiscal stabilization reserve. 

Utilities are expecting a $1.2 million net surplus mostly due to additional revenue in Waste Services and Saskatoon Light and Power, offset by lower revenues and additional costs in Water and Wastewater Utilities. Any utility variance will be offset through transfers to or from the applicable stabilization reserves.