Coming up short on revenues and expecting even larger shortfalls, Woolwich is moving to cut spending to offset the losses.
Recreation fees are already down $100,000, with that department’s expected revenues to be off by $400,000 by the end of June. Including other declines, revenues could be off by some $600,000 by the halfway point of 2020 due to the COVID-19 lockdown, director of finance Richard Petherick told Woolwich councillors meeting Tuesday night via video conference.
Other shortfalls include an estimated $100,000 in lower returns on the township’s investment and foregone late fees and interest charges given the waiver previously approved by council in response to the economic downturn.
To counter that, Petherick proposed spending cuts and deferrals totalling $3.9 million, about a third of which was to be funded from this year’s tax levy. That $1.2 million in levy savings would provide wiggle room should the crisis drag on through the summer and into the fall, which would have an even greater impact on revenue forecasts, he added.
“As this pandemic continues, and with the recent announcement of all indoor and outdoor recreational facilities being closed until June 30, this revenue crisis is going to get worse before we begin to turn the tide. Depending on how long closures continue, staff are projecting recreational revenues to be down over $400,000 from what was budgeted for in 2020,” he said in a report to council.
Financial results from the first quarter of the year, which reflect coronavirus-related changes that started just in mid-March, are expected to show more dramatically in this quarter.
“We’re going to see that start to show up in the April and May time period,” said Petherick of the lower revenues.
In response, “cost containment” measures are needed to reduce expenditures “to ensure that we’re going to remain liquid,” he added.
“Staff are proposing a two-fold strategy to assist in mitigating the economic impact of COVID-19. This strategy is meant to achieve two different objectives. First, this strategy is looking to reduce expenditures that specifically use levy dollars. The projected loss of revenue, if left unchecked, will result in the township being in a significant deficit position at year’s end,” he said in his report
“The second objective is to reduce expenditures no matter the source of funding. The goal of this objective is to ensure the township remains solvent as we navigate the uncertainties of tax and utility collections that may result in a significant increase in arrears.”
Among the cost-cutting measures are some $2.9 million in capital projects such as road work, along with the deferral of studies such as those planned for the Elmira core and the St. Jacobs stockyard area for at total of $125,000. Staff training and development spending will be cut to save $46,000, and a range of external contracts and services will be rolled back to save $227,000, all part of the $3.9-million total.
Even when the township is allowed to begin reopening its facilities, resuming its services, Petherick predicted there would be both a continued shortfall in revenues and increased costs to implement health and safety measures in its buildings.
“Even when the province starts to ease current restrictions, we will need to put into place additional safety measures. This will include enhanced cleaning for all our facilities, installing glass/plastic shields at all the customer service counters, and installing touchless faucets in all of our washroom facilities. None of these expenditures have been budgeted for this year and we will need to find ways of managing these additional costs,” he said.
With that in mind, Mayor Sandy Shantz suggested the township look at using funds from its special infrastructure levy to cover COVID-related upgrades to buildings, a topic for a future council discussion.
Noting that May 1 was the due date for the latest instalment of property taxes, Coun. Patrick Merlihan inquired about the extent of late payments, with Petherick responding that about 89 per cent of the bills had been paid on time, a figure not much lower than the usual rate in the “low 90s.”
While the township isn’t currently charging late fees, the due dates for all taxes remain in effect, he added.
The current waiver is a blanket one, but any extension of the relief effort may be on a means-tested application process, council suggested.