Castlegar’s director of finance Ola Oladele has released a report detailing the city’s year-to-date financial situation as of the end of June.
More than half of the reporting period has taken place since the COVID-19 pandemic drastically changed the city’s financial outlook. The city has been affected by reduced revenues from several sources including the airport, casino and taxation.
West Kootenay Regional Airport
The biggest loss in revenue the city has seen due to COVID-19 is from the West Kootenay Regional Airport.
With no passenger flights since March and Air Canada setting Sept. 9 as the earliest date it will resume, year-to-date revenue is down 65 per cent. That’s a loss of $414,000
Commissions from airport tenants have also been nonexistent over the last few months.
If the situation continues through the end of the year, the city projects revenue losses of approximately 82 per cent of the annual budget, or just over $1 million.
The city has reduced service levels at the airport in an effort to cut costs including negotiating a 25-per-cent cost reduction with the main airport contractor to reduce the scope of work to cover just base requirements.
Castlegar CAO Chris Barlow said that is about the deepest cut the city can make and still maintain operations. He is also cautious about doing anything that may result in jeopardizing the long term future of airport services.
Even though commercial flights are not landing, the Southeast Fire Centre, BC Ambulance Service and private planes are still using the airport.
Regarding airport operations, a “movement” is either a landing, a take-off or a simulated approach to the runway.
In April there were 294 movements at the airport. In May there were 746 and in June there were 540.
There were also a number of medevac flights — seven in April, 11 in May and 14 in June.
The city has appealed to the provincial and federal governments for emergency funding in consideration of the regional health and fire services the city provides through the airport.
The city receives money each year through a host city agreement with Chances Castlegar. Oladele estimates a $45,000 reduction in revenue for each month the casino remains closed. That adds up to approximately $438,000 for the year.
The projected losses may be reduced once restrictions on casinos are lifted as part of phase four of the province’s restart plan.
Gaming revenues are typically used to help fund capital projects, so the city’s five year capital plan will have to be reviewed to determine which projects will be impacted.
Property tax payments are also down compared to last year.
City council passed a resolution in the early days of the pandemic extending the property tax deadline from July to Oct. 1 and it appears many residents and business owners are delaying their payments.
In 2019, four per cent of property taxes remained unpaid past the July 2 deadline. During the same period this year, 32 per cent remains unpaid.
According to the report, the majority of the unpaid taxes are from the non-residential classes of taxpayers. These were the targeted beneficiaries of the extension in the first place.
Oladele also reports some major taxpayers have reached out to staff to discuss flexible payment arrangements.
Staff is projecting that outstanding tax bills will still be at 15 per cent after the Oct. 1 deadline.
The city has also seen a decrease in investments.
According to the report investment revenue is down about 21 per cent, mostly due to historically low interest rates.
The city has responded by reviewing its investment holdings and repositioning those investments.
To meet cash flow requirements, the city has withdrawn its investments with the Municipal Finance Authority and moved them into its main operating bank account.
The report states that as property tax revenues comes in, staff will review the strategy to determine how to best invest excess cash.
The city has been trying to cut expenses including leaving staff vacancies unfilled, cutting four summer student positions, cutting community event and organization budgets and supply and travel budgets. Parks and recreation services have also been cut significantly.
Barlow says staff will continue to look for more ways to save money.
“That is happening on an everyday basis — deciding what we purchase and what we do,” he said.
He said things like water and sewer services have to remain constant and the finance and development services departments have actually been busier than usual, so cuts cannot be made to those departments.
In fact, revenues at the development services department are currently 34 per cent higher than budget. A significant portion of the increase is $35,000 in revenues from the new FedEx development near the airport.