Winnipeg urged to raid rainy-day fund to stave off deficit this year

Winnipeg finance officials areendorsing a raid on the city's rainy-day fund that would drop its reserves below the minimum recommended level in orderto stave off abudget shortfall at the end of this year.

Based on figures from the end of June, the city is projecting an $8.2 million year-end deficit, according to a report authored by corporate finance officials and published on Monday.

The projected deficitcould be reduced to $5.2 million if the city follows through on its plan to siphon $5 million away from its fiscal stabilization reserve. But that would drop Winnipeg's rainy-day fund down to a self-imposed red line of six per cent of total expenditures.

Nonetheless, finance officials are recommending council vote in favour of the move.

"Council approval would be required to allow this reserve to fall below this level and a replenishment plan would be required," they write.

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The largest single contributor to the forecast deficit is the province's decision to end its long-standing agreement to pay half the cost operating Winnipeg Transit, officials say in a separate report published Monday.

Transit is expecting a deficit of $10.7 million this year, partly because of the changes to the provincial funding agreement and a revenue shortfall due to fewer fares, transit officials write.

Both reports come before council's finance committee on Friday.