THUNDER BAY – A winter marked by several large dumps of snow will take a toll on the City of Thunder Bay’s 2022 budget, the city’s first quarter financial variance report shows.
Additional snow clearing costs were the single largest factor driving an overall projected deficit of $900,000 at year-end in the city’s tax-supported operations.
That overrun represents about 0.3 per cent of the city’s total net budget of $284.8 million, the Q1 variance report presented to city council Monday notes.
The city has already spent about 90 per cent of its $5.6 million budget for snow clearing operations, said city treasurer Linda Evans, and is projected to go $1.4 million over budget in that area by its financial year end of Dec. 31.
The city will dip into its winter control reserve fund to cover that overrun. The fund currently sits at $1.8 million and is expected to grow due to a 2021 surplus in snow clearing operations.
Evans said this year’s “extraordinary” weather illustrated why the city builds up those reserves.
“Certainly it’s an exceptional amount, but that is why we [maintain] reserve funds, and we have a winter control reserve fund specifically for this purpose, to deal with those fluctuations year-to-year,” she said.
Other major contributing factors to the deficit projection included city police ($700,000) and high fuel costs ($420,000).
The police budget has been impacted by higher than anticipated legal expenses for the Thunder Bay Police Services Board, fuel and vehicle maintenance costs, and investigation costs mandated by the Police Services Act.
Coun. Rebecca Johnson called the $200,000 overrun at the police services board “very concerning,” saying the city has little control over it, though council appoints three of the board’s five members.
The city had originally projected the COVID-19 pandemic would have a $7.1 million impact on its budget in 2022, but has revised down that estimate to $5.6 million in the Q1 variance report.
That can be further reduced to $2.6 million after the city applies an expected $3 million in COVID relief funds from upper levels of government left over from 2021.
Excluding the impact of COVID-19, the city is set to record a $2.4 million deficit in its tax-supported operations by year-end.
The overall deficit falls to $900,000 after accounting for lower-than-expected COVID costs, with the easing of nearly all public health measures by April.
The financial variance report projects how the city’s actual spending by year-end will compare to the budget approved by city council in February, using financial reporting up to March 31 and assumptions based on past trends.
