Montreal to cut spending, ask government for help
Despite economic impact of pandemic, no major layoffs are planned, Plante says
As the COVID-19 pandemic continues to batter Montreal’s public finances, Mayor Valérie Plante says the federal and provincial governments will have to step in to help.
The mayor said Thursday the city will cut back spending to mitigate the financial hit, but is not planning major layoffs of public employees.
“We have to be realistic,” Plante said, “because it is clear that our governments’ public finances will be affected by the global economic downturn due to the pandemic.”
Though years of budgetary surpluses have prepared Montreal to withstand the coming financial hardships, Plante said, the slowdown in real estate transactions is taking a chunk out of the city’s revenues.
Expenses have also climbed during the pandemic. The city is spending more on policing, emergency services, protective masks and other equipment.
“The situation we’re in is not an easy one,” added Benoit Dorais, president of the city’s executive committee. The city has seen “important” drops in tax revenues, which will take a heavy toll on the city’s finances.
Under optimistic projections, Montreal could see a shortfall of $104.8 million, Dorais said. A pessimistic outlook projects a shortfall of $294.1 million.
But Montrealers won’t be asked to pay more in taxes to make up for the losses, Dorais said.
“It’s not a question of passing on the bill to Montrealers who are already hit hard by the current situation,” he said.
The city will have to find savings to face the crisis, Dorais said. In the coming days, each borough and city department will come up with a plan to limit expenses and save money.
A hiring and purchasing freeze, among other measures, should help the city reach its savings goal of $123.4 million this year, Dorais said. Some projects will also have to be cancelled or postponed, but Dorais did not specify which ones.
Lionel Perez, the leader of the official opposition at city hall, said the city’s plan wasn’t saving enough. Montreal shouldn’t bank on federal or provincial support, he said. Higher levels of government will also be facing deficits and may not be able to provide the money Montreal will need.
“We understand that the situation is difficult,” Perez said. “But difficult decisions have to be made and the administration isn’t making those decisions now.”
The city’s finances are vulnerable, added opposition city Coun. Alan De Sousa. If the municipal deficit climbs too high, administrators may not be able to borrow money to crawl out of debt, he said, which would result in tax increases.
The city has not, so far, planned to save money by laying off staff, Dorais said. In Toronto, 1,200 transit staff were laid off this week as ridership dropped. Montreal’s public servants, however, will remain on the city’s payroll.
But as the city urges boroughs to find savings, it is unclear if some administrations will resort to layoffs.
Some seasonal employees, like those who work for the city’s recreational programs, probably won’t have work, Dorais said. Such programs are unlikely to go ahead as social-distancing requirements extend into the summer months. Not having to pay those employees will be a small reprieve for the city’s coffers, he said.
Dorais had hoped Montreal would be emerging from lockdown by now and the economy would already be roaring back.
But it isn’t.
The city has emerged as the Canadian epicentre of the pandemic, counting more cases than some countries.
Premier François Legault has spoken about reopening businesses outside of Montreal, but hasn’t said how long the city will remain in lockdown.
Though the virus is still spreading through the community in Montreal and Laval, health officials suspect it has slowed in the rest of the province.