The City of Winnipeg's self-inflicted budget wounds have healed after only a month, as officials say they've shed enough costs to make up for a $9.5-million funding shortfall left over from 2016.

Winnipeg's $1.08-billion budget for this year counted on a $9.5-million transfer from last year's budget, based on a prediction of a surplus for the end of 2016. The city actually posted a deficit, leading chief administrative officer Doug McNeil to announce in March the city will not fill some vacant positions and will also cancel some capital projects.

On Thursday, McNeil told council's finance committee the city has made up for the $9.5-million shortfall by cancelling some capital projects and through the selective hiring freeze, which did not apply to all city workers. The city also placed a wage freeze on 250 senior officials, suspended most conference travel and clamped down on other discretionary expenses.

"We gave each department a target," McNeil said. "In some cases, some departments achieved their targets or exceeded their targets. Other departments didn't achieve their targets."

McNeil did not disclose which projects will be cancelled, saying elected officials must approve any changes to the budget. He said a report suggesting which projects to cancel or postpone will go before council, likely in May.

The cancelled projects will make up $3.5 million of the city's savings, while the partial hiring freeze and other measures made up the remaining $6 million, McNeil said.

"It wasn't easy," he said. "From my perspective, the city is running pretty lean, when you compare us to other jurisdictions across western Canada."

South End sewage upgrade costs rise

City council's finance committee was also told of cost hikes of up to $37 million for upgrades underway at the South End Water Pollution Control Centre, the second-largest of the city's three sewage-treatment plants.

The project, which involves the installation of new nutrient-removal facilities, entered the year with a $336-million budget. Water and waste director Moira Geer said the cost may rise as high as $373 million, based on more detailed design estimates for the electrical and mechanical components of the project.

Geer told the finance committee the cost overruns are not due to any changes in project scope. One of the design estimates lacked detail, she added.

It was a classic case of good news and bad for the City of Winnipeg today on the financial front. A hole in the budget has been plugged, but more money is about to be flushed into sewage treatment. 1:45

She said her department will see whether the cost hikes can be limited through the competitive bidding process.

"Once those results are achieved, then we'll understand what the budget impact might be," Geer said.

The city usually finances sewage-treatment upgrades through borrowing and water-and-waste bills.

Nonetheless, city council finance chair Scott Gillingham (St. James-Brooklands-Weston) was unimpressed.

"In no way should we be cavalier about taking on more debt," he said.

The province ordered the city to upgrade its sewage treatment plants and drainage system in 2003 to ensure fewer nutrients wind up in Lake Winnipeg, where phosphorus promotes the growth of algae that are affecting the ecology of the world's 11th-largest freshwater body.