ST. JOHN'S, N.L. — Wednesday morning’s committee of the whole meeting brought some welcome budgetary news for St. John’s city council.
The 2019 budget actuals are in, and the city managed to accumulate a $13,929,231 cash surplus last year due to expenditure savings and a delayed bond issue. That surplus is equal to 4.6 per cent of the city’s overall budget.
Counting surpluses held in reserve in previous years, the city now has an unallocated surplus of $22,187,859.
That’s welcome news for a hurting capital city this year after January’s $7-million snowstorm, and the COVID-19 pandemic.
Council voted to keep this surplus in reserve for now because the financial effects of the pandemic are still being assessed and, according to city documents, it’s likely some of the money will be needed to mitigate the impact on city finances this year.
“It’s really important that right now we realize that there’s still a lot of unknowns as we move forward,” said Mayor Danny Breen.
“And one thing that we have been vigilant about over the past few years is when we’ve had surpluses, we’ve been able to put some of those surpluses away for a rainy day, so to speak. And we’ve experienced a thunderstorm in 2020.
“So, it’s given us some flexibility that we need, but again, the end picture here is still very unclear as we move into 2021 and beyond. So, there's still a lot of challenges ahead, but having available surplus funds … gives us more flexibility in dealing with that.”
Coun. Dave Lane, lead for finance, said that during the past few years the city has budgeted conservatively — estimating high on expenditures and low on revenue — and that has helped the city to accumulate these funds. Lane said the idea is that a buffer is always needed, and he called 2020 the “most extreme example” of that need.
Coun. Sandy Hickman asked Lane if more would be known about plans for the surplus as budget time draws near at the end of the year.
Lane said a lot of conversations are ongoing about how the city will look to 2021 and handle 2020, so for now, the surplus will remain in reserve, but it’s something the city will “be talking about more publicly over the next couple of months.”
In July, Breen said the city is projecting an $18-million deficit for 2020 by year’s end, largely due to revenue losses experienced this year at Mile One Centre and the St. John's Convention Centre, as well as property tax deferrals and the Snowmageddon bill.
To address the projected deficit, council has already deferred a few previously approved projects, such as work on some city trails and Bowring Park.
Lane said on Wednesday that having the $22-million surplus in reserve will be important for the city.
“We have some budget challenges ahead as the world changes and as expenses change for us as well,” he said.
