(Cam Lee/northeastNOW Staff)

By Cam Lee

COVID-19 challenges

Mayor of Melfort outlines financial challenges faced due to COVID-19 pandemic

Apr 25, 2020 | 8:00 AM

The COVID-19 pandemic’s economic fallout has been difficult for municipalities, according to the mayor of Melfort.

Rick Lang said municipalities can’t budget for a deficit, and in theory cannot run a deficit.

“That means dipping into reserves, which is what commonly cities and towns and villages will do if they have reserves, or in the extreme, I guess they would have to borrow and go into long-term debt,” Lang told northeastNOW.

Lang said the city of Melfort is looking to mitigate that scenario. He said the city’s facilities are closed and that is costing them money through lost fees, and any savings they get from those closures is small. According to Lang, a significant cost for the facilities is through wages, and many of those employees have been assigned elsewhere while the facility is closed.

It was revealed at the council meeting April 7 that the city could lose upwards of $326,000 in revenue from the closure of city facilities.

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“We’re monitoring all of the expenses very closely. We have already cut our revenue projections and we’re trying to work within those parameters to minimize any deficits,” Lang said.

He said the goal is to break even if possible, so they’re not creating a huge deficit.

One significant issue for the city could be cash flow, as the city has extended the payment date on taxes and some utilities. Lang said the regular cash flow may not be there, so it will take some management to operate as normally as possible.

“We’re trying to manage the city in the best way possible to minimize any disruptions and still have everything work, and in the end hopefully we’ll come out with an acceptable financial picture,” Lang said.

He said the pace in which revenues come in won’t immediately change when the COVID-19 situation winds down.

Melfort has accumulated a financial reserve, however, Lang said the city has used those in the past on projects including the Kerry Vickar Centre and the Saskatchewan Drive resurfacing.

“Having said that, we’re constantly replenishing what we use, so we keep the reserves at an acceptable level,” Lang said.

Those reserves are important at a time like this, Lang said, as there may be a need to use them at some point.

“We never draw down the reserves on a permanent basis. We’ll borrow from the reserves with the plan of replacing that money in a timely manner,” Lang added.

He said the city was in decent financial shape at the start of the pandemic and added he hoped that will see Melfort through without having to make some more drastic moves that other communities may need to make.

Lang said Melfort doesn’t have to worry about certain expenses like transportation, with bus revenues down substantially in cities like Regina and Saskatoon. Melfort also has a volunteer fire department that costs substantially less than full-time crews.

He said council and administration are having frequent online meetings to stay informed and in an effort to operate as normal as possible, considering the circumstances.

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cam.lee@jpbg.ca

On Twitter: @camlee1974