The City of Winnipeg ended last year with a $14.3-million deficit, mainly because of lower than expected revenue from regulation charges, higher costs for building materials and a modest cost overrun in the public works department.
The city overspent its $1.42-billion budget in 2025 by one percentage point, according to its year-end financial status report, published on Monday.
The single largest contributor to the deficit was a $6.1-million shortfall in revenue from building, development and other regulatory fees, according to the report, which did not include an explanation for the variance.
The second-largest contributor to the deficit was $5.4-million cost overrun in city asset management and municipal accommodation, which is responsible for building and maintaining city facilities. This overrun was due to higher costs for building materials as well as services, the report states.
The public works department also went $2.4-million over budget due to the combined effects of road replacement costs, spring street cleaning and December snow removal.
Unlike the provincial government, the city is not allowed to carry an operating deficit from one year to the next. The city plans to transfer money from its rainy-day fund, formally known as its financial stabilization reserve, to cover off this year’s $14.3-million deficit.
That transfer leaves the city with $26 million remaining in the rainy-day fund. The city is supposed to set aside six per cent of its budget in the fund, which works out to $85 million.
City council’s finance chair acknowledged the rainy-day fund needs to be replenished. The city has been trying to build the fund up after it was nearly wiped out altogether in 2022 because of the COVID-19 pandemic.
“It’s obviously still a lot lower than the target, but it’s not nothing,” Coun. Jeff Browaty (North Kildonan) said Monday in an interview.
“I think it’s trending in the right direction, but probably not replenishing as fast as I’d like to see.”
As recently as September, the city expected a slightly higher year-end deficit of $17.4 million.
Transit, water and waste surpluses
Two of the city’s utilities, which are not included in the tax-supported portion of the city budget, reported surpluses in 2025.
Winnipeg Transit reported a $4.1-million surplus on its $249-million budget, partly because of delays in hiring drivers, according to the financial status report.
The city’s water and waste utility, meanwhile, posted a $79-million surplus on a $480-million budget, mostly because Winnipeggers used more water last year.
Metered water use increased 8.1 per cent last year, “which was unexpected and outside normal patterns,” reads the financial status report.
Several factors, including population growth, weather, the timing of meter readings around Dec. 31 and more accurate metering technology, drove the increase, according to the report.
The weather component of this phenomenon was drought, Browaty said.
“Because of the dry summer, people were watering their gardens, using more water in their yards, and even watering the foundations of their homes in some cases,” he said.
The finance chair said the unexpected revenue could be used to fund upgrades at the North End Water Pollution Control Centre, the city’s largest sewage treatment plant.
The windfall could also be used to blunt expected increases to water and sewer rates, he said.