COVID-19 continues to make an impact on the City of Trail’s efforts to balance the budget.
The city released its Second Quarter Financial Report for 2020, covering the months April 1 to June 30.
The pandemic came on quickly in March, just after council had approved the 2020 financial budget. The resulting shutdown of Trail facilities in addition to cancelling a property tax increase and delaying tax collection to the end of August, has thrown a wrench in their financial planning.
“The original budget approved before Covid-19 included a net increase in the property tax levy of $801,350 or 5.49 per cent,” wrote Chief Administrative Officer, David Perehudoff. “Council subsequently decided to amend the budget prior to considering the financial bylaws and this resulted in the elimination of the increase in the 2020 property tax levy.”
The city lost anticipated revenue from the aquatic centre and arena, the Riverfront Centre, parking services and the Trail airport, but, also altered its budget to meet the impending crisis.
The city cut its capital spending by over $1M to offset losses and reduce its deficit, and dipped into its surplus funds a bit deeper than previous years to effectively balance the budget.
Normally the transfer is $301,900, but this year due to the pandemic the city increased it to $641,900.
Limited use of recreation facilities and airport traffic has the city projecting a revenue shortfall of $1.135 million, not including the surplus reserve transfers.
“At the halfway point of the fiscal year (June 30), the financial picture typically starts to crystallize,” Perehudoff noted. “However, 2020 presents a unique set of challenges, with the city’s financial results being significantly impacted and somewhat difficult to project going forward. Staff are focused this year on providing a reasonable level of services but also trying to keep expenses down wherever possible.”
Delaying residential and business tax payments to the end of August also skewed Q2 numbers.
The revenue from taxes, $15M, is almost equal to the whole budget, and its delay proved problematic. The city was still bound to pay its provincial and federal government taxes in early August, and was faced with a possible cash-flow problem, until, a familiar entity came to assist.
“The city therefore requested that Teck Metals Ltd. consider to make a payment of 50 per cent of their tax levy on or before the traditional tax due date,” Perehudoff explained.
“Teck agreed and made a payment in the amount of $5.6 million, which in addition to many taxpayers paying earlier than the modified due date, will ensure the city’s cash flow remains in a positive position.”
The detailed financial review is meant to be an internal control measure, which identifies systemic problems or other shortcomings that could be addressed in the future.