Mayor Tara Veer speaks during an update to the community on April 14. (Snapshot from Facebook live stream)

By Troy Gillard

FINANCIAL IMPACT OF PANDEMIC

City of Red Deer has enough cash to get through spring: Veer

Apr 15, 2020 | 11:39 AM

Red Deer’s mayor says the city’s cash flow situation remains strong for now.

But Tara Veer expects the situation will be different come summer depending on how many residents and businesses choose not to pay property taxes until the fall.

“Cash flow will be an issue come July, August and September, there’s no doubt about it,” Veer said Tuesday. “But it will be temporary because it’s not a tax cancellation, it’s a tax deferral.”

The property tax payment deferral approved by city council on Tuesday gives residents and businesses an additional 90 days, through Sept. 30, to pay their 2020 property taxes without penalty.

“We do project cash flow challenges. We don’t have a specific dollar amount for that yet, but that will presumably be coming to council within the next two meetings or so,” Veer suggested. “We know that some individuals and businesses will likely continue on their monthly program, but we fully expect that many will not. We’ll have a better indication of that in the coming weeks.”

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The decision to close Red Deer’s recreation, parks and culture facilities until at least June 30 has a two-fold effect on city finances, Veer noted, in that operating expenses are lower but so too are revenues from user fees.

It’s a similar situation with Red Deer Transit, with Veer explaining that service hours have been scaled back in light of decreased ridership.

Essential services including policing, emergency services, water and wastewater, and electric, light and power continue to operate at full capacity.

Veer says the City of Red Deer has yet to take out any additional borrowing to ensure they have enough cash on hand.

“Council will adopt a borrowing bylaw for operational dollars in the event of an emergency, so that we essentially have those funds available in an emergency or rainy day type of situation, which I think this would warrant. But we have not yet had necessity to draw on that capacity.”

It also remains to be seen to what extent the province will be reimbursing municipalities for expenses relating to the pandemic, Veer added.

“Until we have an answer on that, and until we can actually see how long we are in the pandemic and how long the economic recovery from the pandemic will be, we really won’t have a clear sense of net in and net out (cash flow) until probably the fall.”