Caught in the middle

So far during the pandemic, there’s been help promised for many sectors of the economy, from individual Canadians to big corporations.

But there’s a pinch coming somewhere else.

At the end of your driveway, where your garbage gets picked up. Municipalities are getting hit hard and expect that things are going to get even worse as people are unable to pay taxes.

Here’s St. John’s Mayor Danny Breen, talking about how the city — still reeling from Snowmageddon — now has new costs.

“We’re looking that we expect to be down about $16 million,” he says. “We’re looking at a $7-million cost from the snowstorm, and we’re waiting to see what we get back from the federal government. We’re hoping to get $3 .5 million from them.”

One thing to keep in mind? Municipalities aren’t allowed to borrow money to cover their operating costs.

Breen’s not sure changing that would solve anything: “You’re kicking the can down the road.”

For the city, taxes are about 80 per cent of revenues. Other revenues have tanked — and taxes may, too, as people fall into arrears or are unable to pay.

“At the convention centre, we’ve lost every convention for this year,” Breen says. Mile One? Well, the two sports teams are finished for this year, and St. John’s Sports and Entertainment has processed over a half a million dollars in ticket refunds. Concerts have been cancelled, Metrobus is continuing to operate, but with drastically fewer passengers and fares.

The city has deferred collecting taxes until the end of August to help taxpayers — but is incurring higher debt costs to finance that.

Add to that the problem that municipalities are responsible for so many essential services — firefighting, water supply, garbage collection — that can’t simply be stopped. There are also extra expenses for things like personal protective equipment.

Which means tough sledding ahead.

“We can get through 2020, but my eyes are really on 2021,” Breen says, adding that the city has some wiggle room to use funds from past surpluses, at least for now. “But if we’re using one-time money to fund operating costs, that’s not the position that you want to be in.”

The problem with 2021? That’s when a downturn would really hit home on the city’s tax base — especially if the business sector falters or recovers slowly.

“We’ve talked to the provincial government about the recovery piece of this,” he says.

Those discussions include helping businesses recover, finding ways to address capacity issues for the hospitality sector, and, Breen says, “where else we can help.”

“We really need a co-ordinated recovery plan with the province. We need all hands on deck with this one.”

Problem is, cities and towns in this province are going to need help, too.

And soon.