REAL grilled by Regina city council as 2024 budget debate continues
Regina council stuck between dealing with its REAL problem and a tax increase
Regina city council continued its debate on the 2024 budget Thursday with five hours of grilling the CEO and new board chair of one of its troubled municipal corporations.
Regina Exhibition Association Limited (REAL) has been under mounting scrutiny after reports found its business model unsustainable without subsidization from the city.
The organization outraged councillors even further last month when it submitted a preliminary budget request for $5.8 million in funding from the City of Regina.
The request ultimately prompted council to fire the organization's entire volunteer board and appoint city employees in their place.
On Thursday, REAL's request was even larger, coming in at $6.44 million, an increase of $5.3 million over the $1.1 million budget provided to REAL in 2021, 2022 and 2023.
The proposal sparked disputes between councillors and city officials.
"Part of it is, what I would call it theatrics, going on in the public domain," said city manager Niki Anderson, who was announced as REAL's new board chair Wednesday.
Anderson made passing reference to allegations made against councillors by outgoing chair Wayne Morsky, as well as a belief by Ward 2 Coun. Bob Hawkins that the board as currently constituted is illegal.
Hawkins defended his position, only to be shouted over by multiple councillors seeking a point of order.
Rather than deal with the dispute, council broke for lunch.
Lack of trust and financial troubles
At the core of the heated discussion is a lack of trust between city council and REAL.
Anderson's appointment was an attempt to address that issue, even as questions on specifics were often directed to REAL CEO Tim Reid.
Anderson ultimately said the budget request is realistic.
"This is the amount of money needed by REAL to continue operating going forward in 2024," she said.
Anderson stressed that the budget request is meant to stop REAL from coming forward mid-year and asking for more funding, as it has in the past two years.
"I don't think anybody will see a noticeable difference in any of our events or how we operate if that budget is approved today," Reid told media after the corporation's presentation to council.
"Yes, we will have to reduce some focus and yes, we're going to have to skinny up our operations. But I think it's a time that everybody in the world is doing that."
Reid added that he welcomed the tough questions from elected officials.
"We're asking for considerably more funds than we have in the past and so I'd suggest that [the questions] should be stiffer. And I think we got great questions from city council today. I think we had fair questions and hopefully we answered them to the fullest of our ability," Reid said.
Among the many issues REAL faces is deferred maintenance on the buildings it operates, such as the Brandt Centre, the Co-operators Centre and Affinity Sportsplex.
In 2019, Stantec prepared a report estimating the cost of the deferred maintenance at $44 million.
As officials with the city have repeatedly pointed out on other projects, inflation likely means the current cost would be much higher.
In response to questions from Ward 3 Coun. Andrew Stevens, Reid said REAL had never asked for the millions in dollars necessary for maintenance because the organization's budget requests have never included a capital budget.
Reid said there are other opportunities, such as grants, to pay for the much needed repairs.
Another problem is that REAL accessed $7.5 million from the Canada Emergency Wage Subsidy (CEWS) during the COVID-19 pandemic. That process is currently being audited and depending on the decision from the Canadian Revenue Agency, it could be required to return none, some or all of the money.
"CEWS was put in place so private businesses could continue to operate and that's what we used it for," said REAL CEO Tim Reid.
Reid said audits are part of the process.
REAL's budget request will have serious implications for the city's 2024 budget.
The current proposal in front of council is for a 2.2 per cent increase to the mill rate. That mean's the average home assessed at $315,000 would see their property tax increase by $4.30 per month, or $51.61 over the course of a year.
If the modified request submitted for REAL is accepted, then the mill rate increase would climb to 2.82 per cent.
That means the average home would see their property tax increase by $5.51 per month or $66.12 over the course of the year.
Unless it gets broken out into its own decision, REAL's budget will debated as part of council's entire budget. That discussion is set to continue through at least Thursday afternoon and possibly into Friday.
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