Red Deer city manager Allan Seabrooke says a cash-flow problem will arise in one to two months. (Contributed photo).

Red Deer city manager Allan Seabrooke says a cash-flow problem will arise in one to two months. (Contributed photo).

A cash crunch is coming for the City of Red Deer, says city manager

City council will have to consider loans or borrowing from reserves

With thousands of dollars lost to the City of Red Deer every week, municipal cash-flow problems are expected to arise in 30 to 60 days, says the city manager.

Allan Seabrooke expects his financial team will be going before city council in the next month or two to find a solution to a cash crunch — either by applying for a short-term loans or borrowing from city reserves.

The very low interest rates that are now available from lenders will have to be weighed against the gains the city is making from its investments to figure out the best option, he added.

“We have reserve funds set aside for a rainy day — and this is certainly a rainy day…”

All municipalities face dropping revenues caused by the response to COVID-19. Calgary officials have revealed that city is losing about $15 million a week, while Edmonton officials worry cheques might bounce without some financial assistance from the province.

Red Deer, which is 10 times smaller than these major centres, isn’t in quite as dire a situation, said Seabrooke.

But he acknowledged, “every week we are losing thousands of dollars in revenues from a lot of different areas.”

Recreation and culture facilities are closed until June 30, so the city is getting no money from admissions, classes and rentals.

Transit use has also dropped by three-quarters because of public fears about contracting the new coronavirus. Seabrooke said this means the city has to pay more to subsidize the service.

He added expenses are being reduced to try to offset these losses. Just over 160 casual city workers were temporarily laid off, largely because of the closed recreation facilities — which are using less heat and electricity now.

There are also fewer transit buses running at reduced hours and frequency.

But the Alberta government will allow non-residential property taxes in the province to be deferred for up to three months. And discussions are being held about whether this kind of postponement should also apply to residential taxes.

Seabrooke said municipalities will still collect this money in the end, but the deferrals will add to cash-flow problems.

City of Red Deer officials will be exploring what assistance is available from the provincial and federal government to cover municipal COVID-19-related losses when pandemic measures are finally lifted.

On the positive side, Seabrooke feels the City of Red Deer was in “very good” financial shape before the crisis. “We don’t run deficits, we operate within our means…”

He noted all essential services will continue to be provided, and the parks and trails remain open to the public (although playgrounds are close to reduce the potential for virus transmission).