Cities are ‘bleeding’ cash

Might need to seek federal help over COVID-19

OTTAWA more than $200 billion to keep people and their businesses financially afloat, the federal government could have to write another multi-billion dollar cheque for Canada’s cities, which are hemorrhaging cash because of COVID-19.

Toronto’s Mayor John Tory announced Friday that 5,400 seasonal employees the city usually hires for recreational programs won’t be hired, because the programs are being cancelled for public health reasons.

He said the city can’t bring on more people for programs it won’t be running. He said between rising expenses for public health and other departments, as well as millions in lost revenue, the city is bleeding money.

“The burn rate is $65 million per week, because the city is so big and obviously has finances that accompany the city that is the biggest in the country,” he said.

Toronto’s own health officials say they expect the crisis to last a minimum of 12 weeks, which would mean the city will burn through nearly $800 million. Toronto’s annual operating budget is $13.5 billion.

Toronto’s transit system is still running, but most passengers are staying home and Tory said that is one of the biggest hits.

“The first $20 million is from transit revenues not taken in, by passengers who are not using the transit system.”

He said there are a whole host of other financial hits, from reduced parking fines, to increased overtime costs, higher cleaning expenses and lower permit revenues, even $500,000 a week in lost admission revenue from the Toronto Zoo.

Edmonton Mayor Don Iveson, chair of the Federation of Canadian Municipalities Big City Mayors’ caucus, said municipalities right across the country are dealing with the same problems.

Iveson’s city issued temporary layoffs to 2,000 people this week, mostly people who work in closed libraries and recreation centres. The City of Calgary has laid off 1,200 workers and Windsor, Ont. has let 500 staff members go.

Most municipalities in Canada are required to run balanced budgets, which means unlike the provincial and federal governments they can’t simply borrow through this crisis.

Iveson said cities across the country have delayed property taxes and utility bills to help businesses, but that means eventually the municipalities will run out of cash.

“We have looked at our cash flow in the City of Edmonton and we start to crunch very seriously by October, without some extraordinary relief for our extraordinary costs.”

Iveson said the city also has to keep some services running to help with the pandemic. He said financially, it would make the most sense to shut the transit system, but nurses, doctors, grocery store workers and cleaners all need to get to work.

“They don’t all have cars to get to their work and their customers don’t all have cars to get to their stores.”

Municipalities are a provincial responsibility, but Iveson said provincial governments may simply not have the money.

“There is no province, including Alberta, that we are aware of that is able or willing to backstop its local governments,” he said. “We are going to need the federal government.”

Tory agrees that the deep pockets of the federal government will be needed. He said he understands there have been more top of mind issues for the government in recent weeks, but this will have to be addressed.

“You can’t just leave the cities — where 80 per cent of Canadians live and where the economic activity is centred — twisting in the wind.”

Both mayors say hiking property taxes in a few months, just when businesses are trying to get back on their feet, is a non starter. But they also say it’s hard to see cutting back.

“The water still has to turn on in the morning, the police still have to come if they’re called, the fire department has to come, the ambulances have to come, the roads have to be maintained,” said Tory.

Along with the 5,400 people the city won’t hire, Tory announced a working group to look at ways the city can manage its books. He said the crisis has forced the city to find more efficient ways to do certain things and he hopes to keep those lessons, but he also knows people will need city services.

“We will be looking to save every penny we possibly can, and we are already at work on that exercise, but at a time — when if anything the demand for services from people, to help the most vulnerable people — is up, it is not going to be the easiest time to find savings.”

Deputy Prime Minister Chrystia Freeland said the federal government is aware of the problem and was talking about the issue with provinces.

“We know that the municipalities are really on the front lines of these fights and they’re working so hard and doing a great job,” she said.

THE BURN RATE (FOR TORONTO)

IS $65 MILLION PER WEEK.