The City of Victoria is facing an estimated budget deficit between $12.5 million and $17.5 million as a result of lost revenue and higher cleaning costs associated with the COVID-19 pandemic, a recent staff report suggests.
According to the report, staff estimate the City of Victoria will lose $11.6 million to $16.65 million in total revenue this year. The report also says increased cleaning protocols and other pandemic-related expenses associated with various homeless encampments, bylaw enforcement, public works, parks and facilities are expected to cost the city $850,000 this year.
As a result, staff are recommending councillors approve a handful of proposed measures designed to balance the city’s 2020 budget, including using unspent expense budgets to cover the city’s operating budget shortfall and using as much as $11.64 million of budgeted property tax funding for the capital budget in order to offset the deficit.
On Aug. 6, Victoria councillors will discuss those recommendations in an effort to balance the books.
Mayor Lisa Helps told CHEK the $17.5 million budget deficit was actually expected to be worse.
“$17.5 million is a lot, but it’s not as bad as staff originally projected,” she said. “The original projections in April were up to $22 million.”
In addition to measure like removing the increase in property tax this year, the biggest losses are from parking and other key city sites.
According to the report, staff estimate between $8 million to $12.8 million in lost parking revenue this year and as much as $2.5 million in lost revenue from the conference centre. They also estimate $1.1 million in lost lease revenues and $250,000 in lost revenue from ticket sales at the Save on Foods Memorial Arena.
Councillors have already made a number of moves in an effort to balance the books, such as agreeing to defer roughly $22 million in capital spending this year.
Notable deferrals include $8.3 million in planned upgrades to Topaz Park, the entire $7.9 million budget for the Crystal Pool and Wellness Centre replacement project, $968,000 that had been earmarked for the David Foster Harbourfront Pathway project and $831,000 allocated for the Gate of Harmonious Interest in Chinatown.
“We’ve got about 22 million dollars in capital projects that we’ve delayed,” said Helps. “Delaying capital projects is not always the best solution because when we do capital projects like bike lanes and skate parks that means we are hiring local people and buying things from local suppliers.”
“We are going to need to cut about $12 million out of that, that’s one mitigation strategy of not starting capital projects. There is about another $1.5 million in savings from not starting projects that we wanted to start in 2020 and putting those forward to 2021.”
But critics including Stan Bartlett of the Grumpy Taxpayer$ of Greater Victoria believe the city should instead look at their core services and staffing levels.
“What’s needed is a wholesale look at how the city does their work,” said Bartlett. “Every other major city in this country . . . have made major staffing changes, not a handful.”
In April, 163 on-call and auxiliary staff with the City of Victoria were notified that there was no work due to the pandemic.
Around the same time, the City of Vancouver laid off around 1,500 employees while around 1,900 part-time and auxiliary staff members with the City of Surrey were laid off.
Bartlett said delaying capital projects is a bad idea because it can ultimately cost the city more money in the long run.
“There is a degree of risk there, by the time you get around to the capital project, it may coast a lot more, you will upset the public if it’s a road that really needs fixing. It causes issues, there are even safety issues,” said Bartlett.
But Help’s believes the city’s existing staff are needed and will help keep the municipality going through the pandemic.
“I think all and all the recommendations that staff have made are really solid,” she said.
With files from CBC.