The mayor replaced his usual City of Kamloops pin with Kami the “fighting” fish on Tuesday, when council held its first regular meeting — digitally — amid the COVID-19 pandemic.
“We will fight our way out of this,” Mayor Ken Christian said.
On Tuesday, council directed staff to take a “hybrid approach” in finding savings to offset lost revenue amid the COVID-19 pandemic.
Council directed administration to bring back a report on April 21 with options to balance the budget by delaying non-essential supplemental items, deferring projects, adjusting operating and capital budgets and dipping into reserves. In addition, council will be given options to potentially delay property tax and utility payments and penalties.
City council approved the recommendations unanimously.
“There is no one silver bullet here that’s going to solve the financial problems for the City of Kamloops,” Coun. Mike O’Reilly said.
Council heard it needs to come up with ways to save money to offset anticipated millions of dollars worth of lost revenue in the coming months. It must do so before it finalizes its budget, which is due in mid-May.
The city’s corporate services director, Kathy Humphrey, presented modelling for the months to come, given information known to date and best estimates, and explained how the city’s financial situation dramatically and unexpectedly changed amid the health crisis. Some measures, such as staff layoffs, have already occurred to pinch pennies at city hall.
“We need to find more savings in order to make up for what we’re losing,” Humphrey told KTW earlier in the day.
Modelling looked at financial scenarios anticipated through the end of June and September, essentially six months out, should the city continue on as it has, with closures, reduced services and no other changes.
The city needs to come up with $3.7 million in savings to balance its budget, in the event the crisis continues to the end of June. That number jumps to $6.2 million, should the crisis continue through the end of September.
In addition to property taxes, the city collects revenue from other sources, including casinos, facility rentals and recreation, parking and transit fees.
The city expects $6.5 million in lost revenue by the end of June and $11.6 million in lost revenue by the end of September, including $2.2 million/$4 million from recreation (pools, facility rentals, events, etc.); $1.3 million/$2 million in gaming funds (from casino closures); $807,000/$1.4 million in transit fares (free service); $750,000/$1.5 million in community works funding; $660,000/$1.8 million from bylaw services (free parking); $500,000/$550,000 from building and permits; and $350,000/$450,000 in other revenues.
The city has already offset some of those losses with employee layoffs and savings resulting from scaled back operations and closures, expected to amount to $2.8 million in savings through June and $5.5 million through September. Still, those savings are not enough to cover the lost revenues.
The net aforementioned impact would be significant on taxpayers, an estimated 6.3 per cent tax increase through June or 8.5 per cent tax increase through September, if the city rolled over those impacts onto property tax bills.
The city initially anticipated a three per cent tax increase this year. Humphrey, however, said the city is not recommending taxes be increased.
Many people in the community have been laid off or have had their hours reduced, with businesses ordered to shutter or seeing lost revenues as people stay home during the pandemic to curb spread of the virus. Instead, the city recommends deferring capital projects, scaling back operations and leaning on reserves in this and future years. Humphrey said it is unclear whether revenue from 2019 will return when the pandemic is over.
“We’re anticipating this is going to be a multi-year problem for the budget,” Humphrey told KTW.
During council discussion on Tuesday, Coun. Arjun Singh said he would like to see the city utilize reserves, noting: “It’s a rainy day.”
Coun. Kathy Sinclair, tuning in electronically via video conferencing, cautioned about dipping in too deep, with other “disasters” that could potentially arise this year. Wildfire season is approaching and the city is also preparing for what could be historic flooding.
“This is a very difficult time,” Sinclair said.