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

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

Although last year brought ongoing change and uncertainty, the City remained dedicated to the delivery of core services residents rely on while continuing to find corporate-wide savings and reduce overall spending. Through the saving strategy, the City reduced training budgets and carefully examined discretionary spending to help make up for reduced revenue and other budget pressures arising 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 City Administration will present a report to the Standing Policy Committee on Finance (7.2.4) that sets out the City’s financial strategy to offset this deficit.

“The preliminary $6.54 million deficit represents a variance of just over one per cent from the City’s overall Civic Operating Budget of $546.6 million,” says Director of Finance, Kari Smith. “Our shortfall is largely the result of snow & ice removal costs resulting from the November 2020 blizzard, higher than anticipated Information Technology costs, and lower than budgeted operating revenues. I’m confident in the well-laid financial plan and strategy Administration is recommending to address the preliminary deficit, and importantly, it won’t impact our future service delivery to residents.”

The Administration is recommending the deficit of $6.54 million be funded by:

• $3.71 million from the reallocation of Canada Community Building Funds originally put into contingency for this specific purpose;
• $1.72 million through a one-time increase from the Water Utility Return on Investment (ROI); and
• $1.11 million to be transferred from the Fiscal Stabilization Reserve. 

“While the City has continued to face significant non-tax revenue challenges in user fees and our other forms of revenue have 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 Yields Surplus Utility-Related Results

• Saskatoon Light & Power (SL&P) reported a surplus of $4.49 million. 
• Saskatoon Water reported a year-end surplus of $3.63 million. 
• Wastewater Utility 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 utility posted surpluses:

• the Police Board was under budget by $860,000, this is included in the preliminary year-end deficit.
• SaskTel Centre and TCU Place posted preliminary deficits of $3.96 million and $3.37 million respectively, to be balanced through contributions from their facility and capital reserves. 
• Remai Modern posted a preliminary surplus of $310,526.

The City’s Financial Position Remains Future Healthy

The City’s overall and future financial standing continues to be strong and sound, having 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 finding year-over-year increased operational efficiencies, 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.