Niagara Falls city councillors and staff have their work cut out for them as they try to prepare a palatable operating budget during a challenging pandemic.
Politicians were presented Tuesday with what staff described as a “very preliminary” first draft of the budget with little to no COVID-19 mitigation factors included (for example, use of reserves). It was meant to facilitate discussion and for staff to receive council feedback and direction. No final decisions were made.
A summary showed $128.8 million in projected revenues and $132.6 million in projected expenses. That leaves a $3.8 million deficit. Municipalities are not allowed to run deficits, so councillors and staff have to find ways to make up that difference, whether through raising taxes, making service cuts, or other means.
“We really don’t have an expenditure problem. We have a revenue problem, based on a lot of the revenues that have dried up, based on COVID,” said Ken Todd, the city’s chief administrative officer.
Council referred the operating budget to its Feb. 9 meeting, and asked the municipality’s finance director to report back on ideas council can consider, should the city not receive projected revenues this year from hosting two casinos.
In recent years, the municipality has received about $25 million from Ontario Lottery and Gaming for hosting Fallsview Casino and Casino Niagara, but with both facilities closed since mid-March due to the pandemic, and no re-opening date in sight, councillors are worried about relying on such funding.
“It causes me some concern if we don’t have a fallback position,” said budget chairman and Coun. Victor Pietrangelo.
Hotelier and Coun. Vince Kerrio said most of the people he talks to from the tourism industry believe the casinos’ re-opening “hinges on when our country gets vaccinated to the point where it gets the virus under control.” He said the city should budget based on the belief it won’t receive projected revenues from the casinos.
“I don’t believe that the casino is going to open to the point where it’s generating enough money to give us anywhere near this kind of money, so we better look at it that way, from the start.”
Mayor Jim Diodati agreed, adding the city should move forward with a “more conservative plan.”
“I wouldn’t want to expect that’s going to be there and it not be there and then we have to make up for it. I’d rather be proactive and prepared for it. I’m the biggest optimist going, but I still like a safety net, just in case.”
Finance Director Tiffany Clark said removing the projected $5.8-million subsidy left in the tax-supported operating budget ($8,625,000 in OLG funding, $2,730,000 of which to be transferred to a reserve fund) would result in an 8.1 per cent levy increase.
“It’s not necessarily something you want to do in one shot – you’d want to have more of a strategy to bring that back down, but certainly we can have the discussion about it,” she said.
Clark asked if council had a target percentage it wants staff to get to “that’s reasonable.”
Pietrangelo said he previously indicated he would like to see a budget approved with no increase in taxes.
Coun. Wayne Campbell said he can’t support a zero per cent increase, adding if the city does not increase the levy to at least match the rate of inflation, “you have to cut services.”
“We need to continue the level of service that we have in our community,” he said.
Clark said she offered some suggestions in her report that would get the budget down to a 1.5 per cent increase, but that didn’t include removing any of the casino revenue councillors are concerned may not come.
“I’ll be frank, I can’t get you to zero. If you want to get to zero, you’re going to have to tell me what services we want to look at cutting,” she said. “We do not have enough reserves to get there. There’s not enough money I can pop into this COVID budget to get to zero without some serious service-level discussions.”
Kerrio said there’s a “difference between service cuts and budget cuts.”
“Every time you make a budget cut, it doesn’t necessarily have to be a service cut,” he said. “I wouldn’t like to see a service cut, but I also can’t say that having not had the opportunity to get right into (the budget), whether or not there’s any places for budget cuts that wouldn’t affect service at all, or if it did, it would be minor. That’s why I say, we need to get into it a little bit more before we really could say that for a fact.”