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New Tecumseth finds cost savings as revenues flatten because of COVID-19

May 7, 2020   ·   0 Comments

The Town of New Tecumseth has made several swift changes to the way it conducts business, in an effort to mitigate financial impacts, since COVID-19 struck the community.

Under current projections created by the Town’s Treasurer, Lori Bedford, there’s a $2.17 million revenue reduction up to August 30.

However, during the same period there’s also a $2.03 million decrease in salaries and $389,000 in other savings, creating a surplus of roughly $250,000 for the Town.

“I only indicate that because at this point in time we’re not in a position where we have to find extreme measures in order to salvage the year,” Bedford explained.

The reduced revenues primarily stem from a loss in general parks and recreation activity streams. This includes hall rentals, registration fees, and fitness centre memberships, which accounts for roughly $570,000.

Revenue losses related to the Town’s pool facilities is $90,000, day camp is $80,000, baseball is $80,000, and camping is $80,000, over the summer period.

When looking at hockey revenues, a month was lost at the end of this year’s season and some hockey programming that runs through the summertime has been cancelled. This accounts for a roughly $248,000 reduction in revenue.

The good news is that the Town anticipates hockey programming could be ramped back up in the fall, Bedford noted.

Another large source of revenue losses stems from eliminating the penalties and interest that is usually charged to residents who fail to make payments by their due date.

“We have discounted that penalty and interest because at this point in time we’re waiving those for the first round of invoices that we’ve created,” Bedford explained.

As well, the Town would generally be receiving roughly $190,000 more in investment income than what’s currently being collected due to a reduction in cash reserves, caused by its COVID-19 response.

Bylaw ticketing is down $136,000 also since the Town is being more flexible with parking tickets and other infractions at this time, so it has forecasted a decrease in those general revenues.

When looking at reductions in expenses, there’s an anticipated savings of $1.26 million from laying off all part time and contract employees, not hiring seasonal workers or students, and freezing all hiring for unfilled vacancies.

The Town’s benefit provider, Sun Life Financial, has also discounted them $40,000 as they aren’t incurring the dental or health claims they normally would, creating another area of cost savings.

With Town staff working from home there’s also been a $103,000 cost savings from not attending conferences, using office supplies, or having staff travel for training.

As well, there’s a $286,000 reduction in contracted services, such as cleaning facilities, storm ponds, and public transit.

Other financial considerations for the Town, should cash flow pressures become imminent in 2020, is to leverage the requirements of existing reserves. From the 2019 budget, there’s also a surplus that will be spoken about at Council’s next meeting on May 11.

A tax rate stabilization reserve with $3 million is available as well, along with two other reserves, totalling $8.2 million.

The Town will reassess its financial impacts as the Province releases more information about how it’s reopening and recovering the economy.

By Sam Odrowski
Local Journalism Initiative Reporter



         


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