Responding to the COVID-19 pandemic is expected to be a net cost to the city of $1.8 million, according to a variance report on the annual operating budget presented to city council at its meeting Monday.

While the pandemic is creating more spending, the city will also spend less than budgeted with savings by not hiring seasonal and casual staff because of the pandemic, and its revenue is expected to be higher than budgeted for several reasons.

At the end of the day, it’s expected the city will run a deficit this year of $512,718, says the variance report.

City council passed an initial operating budget of $84.7 million for 2020.

The total cost of responding to the pandemic is expected to be $2.7 million, given lost revenue and additional costs.

But the city is expected to save $902,866 because of COVID-19 by not spending in several areas.

Savings in not hiring seasonal and casual staff are expected to be $507,094, for instance.

Not hosting planned events, as another example, is expected to save $35,052, and not conducting training as planned is likely to save $66,455, according to the variance report.

Shortfalls in revenue due to the pandemic were seen in several areas, including lost revenue from parking meters and transit services.

The decision by council to suspend paid parking at its meters for a couple of months, along with suspending the collection of parking meter fines, cost the city $288,425, says the variance report.

The suspension of collecting transit fares resulted in lost revenue of $459,650.

But lost revenue from recreation passes and membership fees is expected to be the largest factor at $1.26 million.

There were also unexpected expenses due to COVID-19, such as $405,060 in additional wages and benefits, and $47,099 for additional janitorial services.

“Soon after the announced declaration of an emergency, administration implemented a tracking system to monitor direct costs incurred due to the COVID-19 pandemic,” says the report to council.

“Additional costs to the City in the form of unrealized revenues have been forecasted to the end of the year based on actual losses and the current phase of reopening in the Yukon.

“Some cost containment has been identified through delaying hiring of seasonal or casual employees and through the cancellation of hosted events.”

Helping to ease the impact of COVID-19 are several areas of increased revenue, such as an additional $607,197 in tax revenue.

The report explains that 2019 was a tax assessment year, and the results of the assessment were only made available after the budget was prepared.

“Due to unprecedented growth in the community and 2019 being an assessment year, the changes varied significantly from the initial assessment,” says the report.

The city has also benefited from the residential housing boom the city is seeing after the initial slowdown due to COVID-19, resulting in an additional $300,000 in revenue from the development cost charges.

According to statistics released Monday by Statistics Canada, the value of residential construction in July was $25.1 million, or more than double the value of $12 million in July 2019.

“The 2020 second quarter variance projection shows that total operating revenues are expected to be under budget by $1,908,331 and expenses will be under budget by $1,395,613,” says the report to council.

“Therefore, projections to December 31, 2020 as compared to the revised budget indicate an operating deficit of $512,718.”