The City of Regina is predicting a year-end deficit of $1.6 million.
That is according to a third-quarter forecast report that highlighted an overall increase over budget in revenues of $7.6 million, a decrease of $3.1 million from the mid-year forecast.
This is mainly due to a forecasted reduction in municipal surcharge revenue due to the previous year’s electrical surcharge overpayments made by SaskPower to the City due to a SaskPower calculation error, partially offset by a forecasted increase in interest income due to continued high-interest rates.
The forecast also highlights an overall increase over budget in expenses of $9.2 million, a decrease of $1.8 million from the mid-year forecast.
The main changes from the mid-year forecast related to expenses include:
- An increase of $604 thousand for a recent PST audit completed with the province;
- $500 thousand in asphalt costs;
- and $400 thousand allocated fleet costs.
The following decreases offset these increases:
- $300 thousand in additional salary lag (increasing organization-wide amounts to $3.6 million for the year);
- Forecasted changes in transfers from/to reserves ($300K tied to Utility Reserve and service agreement administration fees, and $400K bound to Golf Course Reserve due to increased golf course usage);
- And reduced spending on consulting services and other general operating savings.
The report notes that wage subsidies of $7.5 million received by the Regina Exhibition Association Inc. (REAL) under the Canada Emergency Wage Subsidy program during the COVID-19 pandemic are currently under audit by the Canada Revenue Agency and represent an additional risk to the third quarter forecast, depending on the outcome of the audit.
An outstanding receivable from the Saskatchewan Roughriders of $3.6 million related to rent and other receivables relating to the COVID-19 period could also affect the forecast.
Overall, the deficit reflects an increase over the prior mid-year projected deficit of $237,000 and represents a variance of 0.29 percent.
Key factors continuing to contribute to this deficit include increased expenses for winter road maintenance, increased fuel costs, and various unbudgeted expenses like the emergency shelter.
These increased costs are partially offset by salary lag and increased investment revenues.