Targeted financial plan and use of recommended reserves to offset the preliminary 2021 deficit

The City of Saskatoon released its 2021 year-end preliminary financial statements showing a deficit of $6.54 million in municipal operating programs and a surplus of $12.25 million in utility programs, before confirmation of the year-end audit.

While the past year has brought continued change and uncertainty, the City has remained committed to delivering the core services residents rely on while continuing to find enterprise-wide savings and reduce overall expenses. Through the savings strategy, the City has reduced training budgets and carefully considered discretionary spending to help offset declining revenues and other budget pressures stemming from the pandemic. Fuel savings also helped reduce the deficit.

Under provincial law, municipalities are not allowed to operate with a deficit. On April 12, 2022, the municipal administration will present a report to the Standing Finance Orientation Committee (7.2.4) which outlines the City’s financial strategy to make up for this deficit.

“The preliminary deficit of $6.54 million represents a variance of just over one per cent from the overall municipal operating budget of $546.6 million,” said Chief Financial Officer Kari Smith. . “Our revenue shortfall is largely the result of snow and ice removal costs resulting from the November 2020 blizzard, higher than expected information technology costs, and lower than expected operating revenues. I am confident in the well-crafted financial plan and strategy the administration is recommending to close the preliminary shortfall, and most importantly, it will not impact our future service delivery to residents.

The Administration recommends that the shortfall of $6.54 million be funded by:

  • $3.71 million from the reallocation of the Canadian Community Development Fund initially set aside for this specific purpose;
  • $1.72 million through a one-time increase in the return on investment (ROI) of water utilities; and
  • $1.11 million to be transferred from the financial stabilization reserve.

“While the City continued to face significant non-tax revenue challenges in user fees and our other forms of revenue either remained flat or decreased year over year, it is important to recognize that several of our businesses also achieved surpluses in 2022, including Saskatoon Light & Power and Saskatoon Water,” Smith says.

2021 Preliminary Year-End Returns Excess Utilities Results

  • Saskatoon Light & Power (SL&P) reported a surplus of $4.49 million.
  • Saskatoon Water reported a year-end surplus of $3.63 million.
  • The wastewater service reported a year-end surplus of $2.74 million.
  • Storm Water Management Utility reported a year-end surplus of $345,485.
  • Waste Services Utility reported a year-end surplus of $1.04 million.

In addition to the surpluses posted by the public service:

  • the police commission was under budget by $860,000, this amount is included in the preliminary year-end deficit.
  • SaskTel Center and TCU Place posted preliminary deficits of $3.96 million and $3.37 million respectively, which will be offset by contributions from their facilities and capital reserves.
  • Remai Modern posted a preliminary surplus of $310,526.

The City’s financial situation remains healthy for the future

The city’s overall and future financial position continues to be strong and sound, with its “AAA”/stable credit rating reaffirmed by S&P Global in January 2022. In planning for a bright and sustainable future, the city is committed to find, year after year, year has increased operational efficiency, creating greater savings across the organization and recovering from the financial impact of COVID-19.

The external audit of the 2021 financial statements is expected to be completed in June 2022. Following the external audit, the audited financial statements will be presented to City Council for approval. At that time, the year-end financial results will be confirmed or adjusted based on the recommendations of the external audit and presented in the 2021 annual report later this year.