SASKATOON — The city of Saskatoon is facing a significant budget shortfall for the years 2024 and 2025. The projected funding gap for these two years is over $75 million, with $52.4 million expected for next year alone. Several factors have contributed to this unprecedented revenue gap, including inflation, lower-than-expected revenues as the city recovers from the pandemic, and the service requirements of a growing city like Saskatoon.
City of Saskatoon Chief Financial Officer Clae Hack acknowledges the financial pressures the business community and residents face and recognizes the need for significant adjustments to address the revenue gap. The city knows that difficult decisions must be made to reduce the funding gap and minimize the impact on property taxes.
A budget summary reveals that the funding gap is estimated at $30.5 million for 2024 and $15 million for 2025. Base budget adjustments are set at $18.4 million for 2024 and $2.4 million for 2025, while expected growth is projected at $10.9 million and $5.8 million for the respective years. The Black cart-utility program is also facing a funding gap of $7.4 million.
If the revenue gap is not addressed, the city will experience an 18.56 per cent property tax increase for 2024 and a 6.95 per cent increase for 2025. However, the administration is committed to developing options and strategies to minimize future property tax increases.
Saskatoon is not alone in facing budget pressures, as inflation and post-pandemic effects continue to impact municipalities across Canada. The administration intends to provide viable options for City Council to lower the revenue gap and associated property tax increases for 2024 and 2025.
The city's operating revenues have yet to return to pre-pandemic levels, and the one-time funding of $10 million included in the 2023 budget has been fully utilized, contributing to the budget gap for 2024. The funding management strategy implemented during the pandemic, which aimed to offset revenue decreases and assist with COVID-related expenses, will no longer be needed as revenues are expected to return to pre-pandemic levels next year.
It's important to note that the administration has not made any budget or property tax rate recommendations. The 2024/2025 Budget Status Update report will serve as the foundation for discussions with the City Council in the coming months, and special budget meetings will be held to present options that could lower the 2024 property tax and restore the property tax rate 2025. The City Council's Governance and Priorities Committee is scheduled to discuss the report on June 14, with the finalization of the budget expected in November of this year.
Inflation has also had a significant impact on various city expenses. Contract costs for maintaining the roadway treatment cycle have increased by 30 per cent, while Saskatoon Light & Power has seen a 33% hike in materials and equipment prices. Additionally, the cost of a new apparatus for the Saskatoon Fire Department has risen by 60 per cent, from $900,000 to $1.5 million.
The city of Saskatoon requires resources to address the growing pressures it faces in 2024 and 2025. These pressures include the opening of Recovery Park, the extension of Saskatoon Transit Services for areas like Aspen Ridge, Evergreen, and North Kensington, the beginning of a new fire station, and the construction of the East Leisure Centre in 2026 and 2029, respectively. Furthermore, funding will be needed for future Emergency Snow Event responses and the Bus Rapid Transit project phase-ins.
