Hiring freeze, reserves could help Saskatoon offset $20M to $43M financial hit from COVID-19
Reducing park maintenance and training also outlined as options
The City of Saskatoon has laid out options, including a hiring freeze, to offset an expected financial hit from the COVID-19 pandemic that could range from $20 million to $43 million.
The city outlined three scenarios on Friday afternoon, based on when current rules about physical distancing might be lifted. Each scenario comes with a projected deficit figure for 2020.
These figures already take into account savings from not having to spend as much on fuel, a reduced workforce — the city laid off 126 casual staff one month ago — and utility stabilization reserves:
- Restrictions end June 30: Deficit of approximately $20.2 million.
- Restrictions end Sept. 30: Deficit of approximately $32.0 million.
- Restrictions end Dec. 31: Deficit of approximately $43.0 million.
On the other hand, the city said that if the following measures are taken, each of those potential deficits could be significantly reduced:
- Hiring freeze.
- Non-essential spending freeze.
- Travel and training reductions.
- Cost reductions for park maintenance due to reduced staffing levels.
- Use $2.8M of fiscal stabilization reserve in 2020, hold remaining $2M for 2021.
"What is laid out here is the overall strategy for council and we're looking for their direction on the 2020 work plans and the strategy to address the revenue shortfalls that we're facing," said city manager Jeff Jorgenson.
City council is scheduled to hear about these options Monday during a virtual city hall meeting.
The report from city staffers warned the financial impact of the virus will likely extend beyond the fiscal year 2020.
"It's quite a comprehensive report package.… It will suggest a balanced strategy to deal with that 2020 deficit," Jorgenson said.
"There will be a balance of maintaining the current services provided by the city, utilization of our reserves, and also working with the Federation of Canadian Municipalities on working with the federal government for a support package."
Loss of revenues
However, the city has seen a number of revenue streams dry up, he said.
Those include money the city would usually bring in from transit, parking meters, traffic fines, and leisure centres.
"All of those impacts have been really profound for the city," said Jorgenson.
The city could offset some of that lost revenue with layoffs, a hiring freeze, using less fuel and reducing bulk power charges.
Jorgenson said it can also freeze non-essential training and travel, which could save about $1.2 million.
"Some of that would be is on-the-job training ... some of that would be professionals that go to a conference or go to a workshop to further develop their skills," he said.
Travel will already be restricted because of the pandemic, he said, "and for financial considerations, we're recommending effectively a lockdown on travel and training."
"We think with the opportunities for those savings we can significantly offset the revenue impacts for the city," Jorgenson said.
"That said, there would still be an outstanding deficit."
Shuffling major projects
The pandemic may affect the timing of some major projects — or whether they'll still happen, Jorgenson said.
"We have scrutinized our capital project list for the city of Saskatoon and looked at all of the projects from a pandemic perspective, and some [projects] make sense to actually be brought forward if we can," Jorgenson said.
"For example, work in the downtown — this would be a great time to do as much work in the downtown as we can, because it's quiet there now."
On the other hand, the city may adjust when it will replace water mains in residential areas. He said the city will try to defer those replacements in areas where there are many people working from home, and will focus on replacing water mains where fewer people will be affected right now.
The report is posted on the city's website.
Jorgenson said the city had hoped to release the report earlier but that the timing of the Saskatchewan government's "reopen" plan forced the city to rework parts of its report.
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