The City of New Westminster is a step closer to approving its 2020 budget – but is anticipating it will need to be amended in the months ahead as the impacts of COVID-19 become more understood.
At the end of February, city council was considering a draft 2020 to 2024 financial plan that a proposed tax rate increase of about 4.9% and a 1% capital levy. But that was before the COVID-19 pandemic hit and created uncertainty about the city’s finances.
“In recognition of the COVID challenges to the community, the 2020 general fund operating budget in this report reduces the proposed property tax increase from 4.9% to 3.1%,” states an April 20 staff report to council. “Staff recognizes that the situation under COVID continues to be uncertain for the community and for the City of New Westminster. It is recognized that this draft financial plan is based on assumptions and funding allocations compiled prior to COVID, and staff anticipate that further refinements will need to be made over 2020 to reflect the financial realities from the COVID pandemic to the city’s level of services and programs.”
Lorraine Lyle, the city’s acting director of finance, said a great deal of work is being undertaken by the city in response to the crisis, including redeploying staff to address issues affecting the community, quantifying the impacts on revenues, examining opportunities for cost reductions and introducing programs to assist residents.
On Monday, council directed staff to prepare bylaws regarding the 2020 to 2024 financial plan, as well as the corresponding 2020 tax rates bylaw. This year’s budget includes a 3.1% tax rate increase and a 1% emergency fund levy.
A staff report states the tax increases translate into an approximate increase of $103 to the average household and an increase of approximately $919 to the average business property owner. In addition to property taxes, the city previously approved increases related to the city’s utility rates: water (7%); sewer (7%); solid waste (12%); and electrical (2.8% and a 1% increase in the rate rider).
For 2020, the city is considering a $136-million general fund operating budget, which includes ongoing revenues and expenses related to providing services such as police, fire and rescue, parks and recreation, library, cultural services, development and engineering.
The city also is proposing an $80.1-million capital program. Major areas for capital spending in 2020 include land for parks and greenways, city hall renovation, Queen’s Park Sportsplex, Massey Theatre renovation, Canada Games Pool replacement, child care and affordable housing projects, transportation infrastructure (including walking, safety and accessibility improvements) and Westminster Pier Park expansion and playground.
“The budget that is being presented here doesn’t fully encapsulate all of the discussions and work that is happening to adjust the COVID-19 crisis that we are facing,” Mayor Jonathan Cote said Monday. “A lot of that work and information will be available as we make adjustments to the budget through the process.”
Lyle said staff has been working on a variety of things that will impact the current operating budget.
“We started to look at revenue impacts first,” she said. “As you know, there have been many announcements that have come through that will dramatically impact the revenues of the city. Some of those are to do with parking revenues, the casino revenues and the taxation revenues, some policies that have been put into place by the provincial government. We are working not just on revenues and expenses but taking a look at our cash flows, looking at a number of things from a cost perspective.”
Lyle said the city recently announced it will not be scheduling 601 of its auxiliary workers starting this week.
“Staff is working on other areas of cost reductions besides labour to see what we can do to react to the dramatic decrease that we are going to have in cash inflow and in absolute lost revenues for the year,” she said. “That will take a number of weeks, and working on into the summer, to actually quantify – and then we need to translate what we see happening on a cash basis and work the policies into an actual revenues and expenses forecast.”
Under the Community Charter, cities are permitted to make amendments to their financial plans.
“I don’t have a definitive timeline when that will take place as we are seeing shifting of policies and impact on a weekly, if not daily basis right now,” Lyle said, adding staff will be providing information to the public as various parts of the plan take shape.
Cote said the city is working on a number of measures to address the falling revenues it is seeing in a number of areas, including casino, parking and parks and recreation revenues. He said this is normally a busy time of year for the city with the budget, but COVID-19 has added a “whole new layer” of challenges.
“I have actually been really proud of the work that staff has been doing, not only to get us through the budget process but also dealing with everything else and all the new financial challenges we face,” he said. “We are not out of the woods yet, but I am starting to feel a little more comfortable that we are starting to develop a plan that is going to be able to get our city through this.”
Coun. Jaimie McEvoy said the city is in an “unusual situation” and is doing the best it can in response to the COVID-19 crisis. He noted the city has reduced the anticipated tax increase, has reduced some “pretty important measures” such as its plans to deal with the climate emergency and has stopped scheduling 600 employees.
“We are trying to be as thoughtful and as prudent as we can be, without falling into the camp of ignoring the problem too much and without falling into the camp of wildly speculating what happens next,” he said. “This is really a week-to-week, day-to-day thing. Administering this budget is going to be a lot different than administering any other budget has been.”
Coun. Chuck Puchmayr said council needs to have some “bigger discussions” about possible delays and deferrals to some of the big-ticket items in the budget. He questioned whether the Canada Games Pool replacement project or the Massey Theatre renovations play a role in this year’s tax increase.
“Any changes to the capital program don’t have a direct correlation to the net revenue and expense figures,” Lyle replied. “The thing that impacts the current tax rate mostly directly are the current operations. Changes to the capital program would have more impact on a go-forward basis.”
Puchmayr questioned staff about the projected savings by laying off 601 auxiliary employees and wondered if the city has a “crystal ball” to get an idea of the when they may be returning to work.
Lisa Spitale, the city’s chief administrative officer, said the City of New Westminster is governed by provincial health orders.
“We are trying to anticipate when the physical distancing orders are going to be lifted,” she said. “Right now, most cities are looking at three scenarios. Probably the most optimistic is returning to some sense of business as usual by July, all the way until the end of the year.”
Spitale said the city has been focusing on “full pandemic response” for the past few weeks, which has included setting up working groups, task forces and the emergency operations centre, and looking at what services will continue at this time. Now that it’s in a state deemed to be “the new normal”, she said the city is looking at services and programs in a context of COVID-19 and the level of city service anticipated going forward.
“All of that will be brought to council,” she said. “As soon as we have got some more definitive projections, we are going to bring that forward so we have full transparency of what we see as the financial picture.”
