City must remain open to all financial options

It is too early for Peterborough’s city council to make decisions on how to cover the financial costs of this coronavirus pandemic, but not too early to be thinking about it.

With that in mind, two reports came to council last week.

One put the city’s lost revenue to date at nearly $7 million. That number will continue to rise.

The other came from Peterborough Public Health, which so far this year has spent $1 million more than it budgeted for.

Again, that number will go up. But neither total is the final word on how the two organizations are doing financially.

The city’s figure doesn’t include additional spending, which will add to the red ink.

But it also doesn’t include savings from layoffs and other expenses that disappear along with revenue.

The public health unit has identified savings. The net shortfall on that extra $1 million is actually just $129,000.

And since the provincial government has said it will make up additional public health costs, even that smaller number might just go away.

Other agencies and services that are jointly funded by the province and the city will be in similar situations, although they aren’t spending at the level of the health unit.

Ambulance service and the city police come immediately to mind. A potential bigger hit could be an increase in the number of people who go on social assistance as jobs disappear.

Windfall revenue is also a possibility.

The Federation of Canadian Municipalities has asked Ottawa for $10 billion in aid to be shared by all municipalities.

A known payday is the $105-million sale of the poles and wires side of Peterborough Utilities to Hydro One, approved by the province’s regulatory agency last month. The city will net about $55 million.

Current plans are to invest the money and use annual returns to pay for special projects. Council would be wise to park that money in GICs for the immediate future in case some of it is needed once the final COVID-19 reckoning is known.

Another option, one we discussed earlier, is for the provincial and federal governments to give the city more leeway to spend some of the millions it gets in tightly restricted grants each year.

Coun. Dean Pappas, the finance and budget chair, has floated the idea of covering any shortfall by taking money from reserve funds and paying it back later.

That sounds like the obvious route.

Reserve funds are intended to help out when a rainy day arrives, and the last two months certainly qualify.

But most of the city’s reserves don’t work that way. Its $143 million in reserves actually fall $25 million short of long-term commitments.

Money taken out of it would have to be repaid in the near future, according to city finance staff.

With no known horizon for the pandemic’s economic impacts and the city already running a very tight budget, raising reserves would be simply kicking the problem down the road.

Coun. Pappas also said he has no appetite for a higher than usual tax increase. While no politician likes to hike taxes, it is too early to rule out the possibility.

Until the depth of the coronavirus budget impact is known, all options for dealing with it should stay on the table.