'Nobody wants to pay this money': City of Regina dipping into reserves to pay EDR, REAL CRA debts

The City of Regina is dipping into its reserve funds to repay the Canada Revenue Agency (CRA) for wage subsidies two city-owned groups received during the COVID-19 pandemic.

Regina Exhibition Association Ltd. (REAL) and Economic Development Regina (EDR) both applied for and received the Canada Emergency Wage Subsidy (CEWS) in 2020.

“Board and management at that time were making decisions in a very uncertain environment,” EDR CEO Chris Lane told council Wednesday. “The CRA is now making decisions in hindsight.”

“We used these funds in good faith to retain staff on our payroll,” said acting CEO for REAL, Roberta Engel.

CEWS was created by the CRA to assist organizations who were seeing decreased revenues in paying employees while restrictions were in place.

REAL received just over $6.5 million during the pandemic while EDR was granted about $667,000.

The CRA audited organizations who received the funds last year and determined neither REAL nor EDR were eligible to receive the grant. Both organizations must now repay the loans with interest.

“REAL’s ability to take on additional debt would require additional funding,” Engel explained.

“In any case, the eligibility was at best, unclear,” Lane said.

The city owed the CRA over $9 million.

To repay the loan, they looked towards the General Reserve Fund.

“I don’t think this is us cleaning up their mess or errors,” ward 6 coun. Dan LeBlanc said. “If I was on either board at the time, I would have applied.”

“Them’s the breaks,” he added.

• Get the CTV News app for Regina breaking news alerts and top stories 

Mayor Sandra Masters told reporters after the meeting many parts of the city continue to feel the effects of COVID-19.

“And we’re going to keep experiencing this for another couple years,” she said. “I don’t think there’s one member of council who would like to pay this money back.”

REAL and EDR are hoping to be granted interest forgiveness on the loans to save both organizations and the city important cash.

General Reserve Fund 

When looking for the money to fund the repayments, city administration recommended council use the General Reserve Fund to do so.

However, at the May 17 private meeting of Executive Committee, councillors rejected that idea.

It was revealed at council this week it was because the reserve fund was already below its minimum allowable level.

“The General Fund Reserve is crucial,” Masters said. “When infrastructure fails, that emergency money has to come from somewhere.”

The depleted reserve was caught by the city’s Audit and Finance committee.

They found that the Fleet Reserve, which is used for transit and city work vehicles, was $11 million over its suggested maximum.

Council approved the transfer of $8 million from the fleet to general reserve to cover the costs of the debt.

“It was either look at other reserves which are above their maximum or come back at budget time with a tax increase directly to residents,” said Audit and Finance committee chair Jason Mancinelli.