THUNDER BAY – The City of Thunder Bay is projecting a multimillion dollar deficit in 2022, after posting a historically high surplus last year.
The second quarter financial variance report released by the city on Friday projects the city will finish the year with a deficit of $5.3 million in tax-supported operations, or about 1.9 per cent of the city’s $284.8 million net budget.
It’s an increase from the city’s first quarter variance report, which projected a $2.4 million tax-supported deficit.
The report will be presented to city council on Monday.
The city posted a historically high surplus of $10.9 million in 2021, prompting a failed push at council to explore returning some of those dollars to residents.
Council instead directed the funds to reserve accounts, several of which are suggested by staff to cover this year’s deficit.
Policing is the biggest single driver of the anticipated $5.3 million shortfall, with the Thunder Bay Police Service expected to go $2 million over budget due to investigations mandated by the Police Services Act and additional overtime.
The Police Services Board is also anticipated to go $200,000 over budget due to legal expenses.
Other major drivers include roads and snow clearing ($1.6 million over budget), fuel ($1.1 million), Superior North EMS, attributed to overtime and WSIB ($600,000), and legal fees ($400,000).
The city expects to realize savings of $500,000 through hiring gaps related to staff vacancies, and $400,000 in utilities costs.
Thunder Bay Transit is projecting a $300,000 surplus, which is proposed to be transferred into the capital transit reserve fund.
The city also expects to lose $600,000 less than it originally forecast related to COVID-19, reducing the amount it will need to draw from its stabilization reserve.
In its first variance report, the city had projected the number would be $1.5 million.
The decrease is primarily due to a $700,000 shortfall in solid waste operations due to reduced commercial activity, a $500,000 shortfall for recreation and culture from lower user fees and concession revenue, and $200,000 related to city long-term care facilities additional COVID-19 expenses.
That leaves the city facing a projected $6.5 million impact from COVID-19 in 2022.
Of that, $3 million will be covered using leftover Safe Restart funding from prior years, leaving $3.5 million to be drawn from the stabilization reserve, unless further government support is received.
City administration proposes covering the tax-supported deficit with $1.4 million from its winter control reserve fund, $400,000 from a legal fees reserve fund, and $200,000 from an insurance claims reserve fund, leaving $3.3 million to be funded from the stabilization reserve.
Along with the $3.5 million anticipated COVID loss, that would draw the stabilization reserve down to an uncommitted balance of $7.7 million.
The city has posted annual surpluses of between $1 million and $5.6 million since 2016. The city posted small deficits in each of the four years before that.
The city also reported financial projections for its rate supported operations, including an estimated $500,000 surplus in waterworks and $400,000 for wastewater.
Solid waste operations project a $1 million deficit, with $700,000 of that related to COVID-19, the city stated.
