'Glitch' leads to $800K budget shortfall

Deputy Mayor Tanya Vrebosch led off a special committee meeting regarding the City of North Bay's 2021 budget with some "good news," by acknowledging $250,000 in funding announced by Nipissing MPP Vic Fedeli earlier Wednesday.

The budget chief then switched gears to the "bad news."

Due to a "WSIB system glitch," as Vrebosch called it, an incorrect forecast was provided and it was discovered only Monday the City and taxpayers are on the hook for an $825,000 shortfall owing to the Workplace Safety and Insurance Board of Ontario. 

Figuring in the effect of the higher WSIB rates on the police budget and the general budget, according to the City, the levy increase for 2021 now stands at 4.22 per cent or 3.83 per cent after growth, up from the 3.36 per cent or 2.97 per cent (after growth) increase to a $97 million levy that was expected to be passed next week.

"It wasn't great news that we heard," she stated. 

Vrebosch then proposed — and gained unanimous support from her colleagues — to push back the passing of the budget until January 2021.

Chief Financial Officer Margaret Karpenko has asked for — and received — some time to go over the budget to find a solution for how to deal with this unexpected expense.

The WSIB change "is not just a one year thing," advised Vrebosch, "it is ongoing money, so it's not something where it's a one-time use of reserves and off the books the next year. And, there's a phase-in of WSIB over the next couple of year that can impact us," as WSIB rates could rise another five per cent over the next few years.

Karpenko told members of Council the City received notice from WSIB in the spring its rates had dropped to $1.97 per $100 of insurable payroll. 

"That triggered a credit of just over $300,000" she said. "We reported that credit in our June and September variance reports."

This past week, Karpenko received the letter notifying the City of the "glitch," and advising the rates should have remained at $4.41 per $100 of insurable payroll all along. Instead of charging the City retroactively to the spring, WSIB will "only" collect back to October. 

Instead of the anticipated passing of the budget at a meeting next Monday, Mayor Al McDonald suggested a special committee meeting be scheduled for Jan. 4, 2021, to learn of Karpenko and staff's findings with an aim to pass the budget the following Tuesday.

"We need a longer-term plan," observed Vrebosch. The proposed budget already included the use of $2.9 million in reserves. If the $825,000 WSIB payment is covered by reserves in this budget, it would lead to an automatic one per cent increase to begin the 2022 budget process.

Karpenko warned not addressing the shortfall in this budget would not "be in the City’s best interest," and would leave the City exposed to a deficit in 2021.