Vernon Recreation Centre pool was shut down during the early days of COVID-19 but the loss of revenue was partially offset by a drop in expenses.

Image Credit: City of Vernon

At the height of the COVID-19 lockdown last spring, Vancouver Mayor Kennedy Stewart spoke publicly about the risk of bankruptcy if people didn’t pay their property taxes because of COVID-19.

That eventually led to a federal-provincial COVID-19 Restart Grant that pumped more than $50 million into Thompson and Okanagan municipal coffers earlier this month.

But a funny thing happened: People paid their taxes on time, and municipalities weren’t actually short on much cash. They didn’t need much in restart costs and much of that money from the federal government is now being set aside for a rainy day.

“Back in June and in May, that was our fear. With COVID hitting so many people in our community hard, we were worried we wouldn’t have the cash flow to continue if people didn’t pay their property taxes,” Kathy Humphrey, Kamloops’ director of corporate services told iNFOnews.ca. “Here in Kamloops, anyway, we had a normal year for property taxes. The same percentage who paid their taxes every year, paid their taxes this year, so we didn’t have the cash flow situation.”

READ MORE: B.C.'s two largest Interior cities not facing bankruptcy, but it can’t be ruled out

The province put in special provisions allowing cities to defer payments and borrow against reserves in the case of shortfall in tax revenue but there was no shortfall in the region's five largest cities.

Then, in early November, the windfall came in the form of the Restart grants that went to cities that never stopped in the first place.

READ MORE: Local governments in the Southern Interior are getting more than $50 million in COVID-19 grants

The impact on Kamloops and Okanagan cities has been largely minimal. Recreational facilities were shut down for a time and still have not returned to normal but, along with lost revenue came lower costs.

“We deferred all sorts of projects and stopped doing a whole bunch of stuff,” Humphrey said. “Once we lost revenues, we basically postponed a whole bunch of activities. We, obviously, didn’t do a whole bunch of events. We had a bunch of capital projects we put off and deferred for a year. We stopped our active transportation activities. We just adjusted and mostly deferred large projects as opposed to shutting down facilities.”

She estimates that COVID-19 cost the city $3-$4 million in lost revenue and deferred projects but it came at no actual cost to the city and no debt was incurred.

That means Kamloops’s $6.7 million grant doesn’t have to replace reserve funds or offset any debt. About $3.5 million will be budgeted in 2021 to offset estimated shortfalls in revenues and increased costs still to come.

The rest will be put into a reserve fund for unexpected costs and/or to move ahead on some of the deferred projects.

The situation is different in each of the region’s five largest cities but similar in the sense that they all seem to be coming out on the plus side of the ledger.

Kelowna got a $7.9 million grant.

A report that went to Kelowna city council on Monday recommended that $2.5 million be used to offset revenue shortfalls and increased expenses incurred this year. The remaining $5.4 million will be discussed as part of that city’s preliminary budget on Dec. 10.

That report also outlines how the grant money can be spent.

“(The money) provides direct grants to local governments to help deal with the increased operating costs and reduced revenues due to COVID-19,” the City of Kelowna report states. “The grant is intended to ensure local governments can continue to deliver the services the people in the community depend on.”

Eligible costs include facility reopening and operating costs, emergency planning and response costs, bylaw enforcement costs, computer and other technology costs (to help improve interconnectivity and virtual communications) and services for vulnerable people.

A Nov. 3 report to Penticton City Council details the $4.3 million in revenue loss that city suffered, primarily $1.7 million in gaming revenue and $1.3 million in recreation revenue.

Then it lists an equal $4.3 million in expense reductions, primarily $1.7 million in payroll reductions and $1.5 million that did not go into its gaming reserve.

Like Kamloops, there is no debt on the books but a shortfall in the gaming reserve fund.

Kamloops, Kelowna, Penticton and Vernon all get a share of revenue from casinos in those cities. Those were closed in March so that money dried up for the rest of the year.

Last year, Kamloops got $2.7 million, Kelowna $4 million, Penticton and Vernon $1.8 million each in gaming revenues.

In a news release announcing that they had received the Restart grant, the City of Penticton recommended their $4.7 million be used to replenish reserves with the rest to be discussed at budget time.

In Vernon, city staff are suggesting the costs of COVID-19 may be felt for the next three to five years, so the use of their $5 million grant is likely to be discussed by council during budget discussions next week.

The city did not provide a summary of what COVID-19 cost it this year but in May, estimated that revenues would be down $5.6 million but expenses would also be down by $4.7 million for a net cost to the city of about $831,000.

West Kelowna is the region’s fifth largest city. It has no casino so did not suffer any gaming revenue losses.

In a report to their council for its Nov. 10 meeting, a summary of the first three quarters of the year showed a drop in revenue due to COVID-19 of $1.8 million while expenses were down almost $1.4 million for a shortfall of $455,000.

Its grant is for $4.6 million.

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