- Brian Kelcey is an urban policy consultant in Toronto. Previously, he was budget advisor to the mayor of Winnipeg and senior political advisor to Queen’s Park.
As Chair of the Winnipeg City Council Finance Committee, Scott Gillingham is now one of hundreds of municipal leaders across Canada struggling with plummeting revenues and rising emergency costs associated with the closure of COVID -19. “If you were waiting for something worse to happen, well, that’s it,” he says.
While US mayors can access hundreds of billions of dollars in federal grants and loans to central banks, city leaders in Canada are facing the same challenges, but without any promise of comparable federal aid to date. No choice is easy: firing a cashier or urban planner saves money in the future, but it also means draining reserves to pay severance payments in the present. The cancellation of public works projects may seem prudent, but local construction companies depend on these works to stay alive despite a possible recovery.
Last week, the Federation of Canadian Municipalities called on the federal government to provide billions of dollars in emergency transit subsidies and to increase gas tax transfers. Others have proposed interventions from the Bank of Canada, or the conversion of federal infrastructure grants into a share of GST revenue to move cash more quickly to cities. At the provincial level, British Columbia allows local governments to keep education property tax revenues they would normally remit to the province as a short-term cushion.
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Here is a sample from west to east of how local authorities are coping with the first days of the biggest financial crisis ever experienced by a municipal government.
Translink (Metro Vancouver Transit and Transit Agency)
Serving: 2.6 million people in Greater Vancouver
Burn Rate: Translink had already lost $ 75 million by plunging tariff and gas tax revenues in mid-April. Even after implementing a wave of announced service cuts, Translink still expects a burn rate of several tens of millions once these measures are completed.
Translink is one of Canada’s largest transit agencies, but from this point on the COVID-19 crisis, it shrinks. By the end of the month, Vancouver’s public transit users can expect to lose up to 40% of service capacity, including fifty-six bus lines and outages in transit service. common fast. More than 1,500 layoffs were announced on April 20.
“Transit systems don’t turn on and off like a switch,” said New Westminster mayor Jonathan Coté, chairman of the mayor of Translink. He said Maclean’s that he and his colleagues are concerned about the future consequences of the service cuts they are forced to make today. “The significant reductions we make in public transit will not only affect us during the health crisis,” he says, “but they will also hinder us during the recovery phase.”
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City of Calgary
Population: 1.5 million
Burn rate: $ 15 million per week
“The good news is that Calgary is exceptionally well managed,” said Mayor Naheed Nenshi as part of Calgary’s success in building emergency supplies. But the mayor of the third term did not beat the scale of the bad news: Calgary is facing a “perfect storm” with the pandemic, economic shutdown and the ongoing oil price shock, all of which are hurting revenues and local expenses. Calgary City Hall has already laid off 10% of its workforce and suspended seasonal hiring.
With Alberta’s economy already struggling before the pandemic, Nenshi is more focused than other mayors on the potential risks to business property tax revenues. “If this company goes bankrupt, who pays this tax? He asked, hinting at the real possibility of a chain reaction if several business failures exceeded the resources of various owners. “Our estimated loss [of between $400-$450 million] until September assumes that everyone can pay their taxes, “he says, a hypothesis that he himself recognizes can be tested given the City’s desire to be flexible in collecting taxes. “We know from research and experience that when a business disaster closes, 30 to 40 percent of businesses never reopen,” he said. “After the 2013 flood, we went down to 5%,” but with the combination of economic pressures, Nenshi thinks it will be difficult to achieve similar results this time.
City of Selkirk, Man.
Burn rate: illnesses and self-isolation have not yet allowed the small financial team of the city to calculate a projection, “but day by day, this pushes our consolidated operations towards the red,” explains the city director general, Duane Nicol.
“It’s a closer community,” he says. “We know the names of people who lose their jobs or who own businesses that are struggling to make rent or pay … For our staff and the Council, the economic spinoffs are not just numbers on a report information is the trembling voice we hear on the phone as people ask questions about their water bills. It’s personal for us. “
Nicol has a list of growing concerns to take into account, including loss of revenue from user fees for arenas and halls, a 50% drop in public transit use and an “almost complete collapse” of the use of accessible public transportation. Despite locals rallying around local businesses, the city is unsure who will be willing to pay when property tax deferrals run out. Although Nicol believes the city’s reserve policies are generally conservative, he notes that Selkirk was already paying for three major capital projects this year. “For the first time in decades, the city had to establish a line of credit to guarantee that we had the cash to finance our operations,” he said.
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City of Mississauga, Ont.
Population: 750,000 inhabitants
Burn Rate: $ 20 million per month to date, with projections of $ 90 million in cumulative losses over six months once the current savings measures are fully implemented.
Mississauga is known for its modern urban services, but effective management has not been enough to protect Ontario’s third largest city from an economic closure that leaves Canada’s second largest job center – the area surrounding the Lester B. Pearson Airport – operating at a fraction of its capacity.
With a wide range of community services available before the pandemic, the city now loses $ 5 million a month due to lost leisure costs alone, in excess of $ 7 million a month in lost transit fares. Mayor Bonnie Crombie adds to this list “lost investment income, a collection fine and interest on deferred taxes … we have no way of recovering this lost income, which is why we need provincial governments and federal intervene and help cities during this unprecedented period of crisis, “she said. Crombie notes that “we are the only level of government to have laid off.” To date, Mississauga has abandoned 2,000 employees.
City of Montreal
Population: 4.2 million
Engraving rate: none confirmed
On April 23, Mayor Valérie Plante tweeted a French expression – “lare fairly strong kidneysOr Montreal “has strong backs” – to affirm its conviction that the City is in a good enough position to emerge from the crisis. Recent budget surpluses have left Montreal’s reserves in excellent condition. However, Plante insisted that in the medium term, Montreal will need federal and provincial aid just as surely as the other cities, and to prove it, she also announced targets for cuts in the central budget of Montreal nearly $ 86 million. She also squarely challenged the nineteen Montreal borough governments to start cutting spending to bring the total savings to $ 124 million.
Population: 7,700 inhabitants
Burn Rate: $ 90,000 increase in expenses – fully offset by a grant from the Government of Nunavut at the moment – and $ 500,000 in lost revenue since March 15.
In Canada’s northernmost and most isolated city, jobs in the public sector and regional Inuit associations have kept employment relatively stable. The community has yet to identify a single case of COVID-19. But Mayor Kenny Bell says Iqaluit is “heavily dependent on the tourism, construction and transportation industries for essential services and supplies. If these industries experience significant downturns, this will have a detrimental effect on our local economy and the well-being of our community, our region and our territory. “
Lost commercial landfill dumping fees, ice tournament rental fees and aquatic center fees are all on the city’s red flag list for revenue. While city general manager Amy Elgersma has successfully avoided layoffs so far through aggressive redeployment of staff into community support roles, her team is also examining the city’s capital program to d ” any reductions if necessary.
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Halifax Regional Municipality
Population: 440,000 inhabitants
Burning rate: Halifax predicts that in the absence of new revenue, it will run out of cash in about four months.
In a presentation to city council last week, city chief financial officer Jane Fraser confirmed that tax deferrals effectively generate nearly $ 200 million in revenue the city would normally count on to manage its cash pressures. Halifax is also one of the few Canadian cities to publicly confirm its parking losses, at almost half a million dollars a month. Although the advisers looked at the damage, they also voted to make the pressure more difficult, agreeing to plan millions of additional revenue losses to reduce late fees and extend delays for besieged taxpayers. Among other Halifax emergency measures already taken: a request for a provincial line of credit to maintain services.
Correction: An earlier version of this story incorrectly identified the mayor of Iqaluit as Kelly Bell instead of Kenny Bell