It looks like the Municipality of Chatham-Kent will have to dip into reserves to avoid a budget deficit this year.
A report by CK Director of Budget and Performance Services Steven Brown going to council Monday night forecasts a $9.1 million deficit by the end of the year, unless the province makes good on its promise to help the municipality pay the Wheatley emergency bill.
The projected deficit could be reduced to $2.1 million if the provincial government comes through with reimbursing the municipality for $7 million to get Wheatley back on its feet.
"The variance projections will become more accurate as the year unfolds. Significant use of estimates, historical knowledge and judgment is used in projecting budget versus actual variances to year-end. Many assumptions were made in the development of the August 2024 variance due to the ongoing inflationary pressures and the Wheatley emergency causing some uncertainty for the remainder of the 2024 budget year," wrote Brown. "Material fluctuations in the projections can occur if unforeseen activity is experienced in the local economy, e.g. social assistance caseloads, fuel and energy prices, seasonal issues for grass cutting and winter control, etc."
Buying properties in downtown Wheatley put a $4.7 million dent in the budget, as did reduced rental revenue at the John Bradley Centre.
Also straining the budget were increased fleet, fuel, and facilities expenses and a $600,000 increase in grass cutting costs due to the wet summer requiring more mowing.
Other projected deficits include $2.3 million due to an increase in taxation write-offs and bad debt expense and a $466,000 shortfall due to a decrease in enforcement ticket revenue and the increased animal control contract.
General administration had a $3.5 million surplus due to provincial funding being received to offset expenses from the Wheatley emergency.
The police budget had a $1.9 million surplus in August because of lower staffing costs.
"It is expected the Province will continue to assist Chatham-Kent with the significant unbudgeted costs related to the emergency (in Wheatley), but as of the date of this report, no formal agreements have been made," said Brown.
In 2024, the municipality is projecting the Wheatley emergency will cost $10.2 million.
Administration is recommending that any deficits be funded from reserves and any surplus be transferred to unfunded capital issues or reserves to handle future issues.
