Region faces $2M monthly shortfall
Lost revenue from user fees of $4.8 million only partly offset by savings of $2.8 million
WATERLOO REGION — A $2-million monthly shortfall is estimated by the Region of Waterloo due to lost revenue during the COVID-19 pandemic.
The total operating loss of about $4.8 million from reduced user fees is partly offset by savings estimated at $2.8 million monthly.
“The region has been experiencing a significant drop in certain user fee revenue,” said Craig Dyer, chief financial officer.
“The lion’s share of that, perhaps not surprisingly, being with respect to our public transit system.”
Transit fare revenue has been minimal since late March and service is free for April until at least the end of May, leading to a loss of about $3.5 million per month.
Other major areas where user fees are down include waste tipping, housing rent, child care fees, planning application fees, airport charges, museum admissions and provincial offences revenue.
Higher expenses are also expected in other areas, including housing, income support, discretionary benefits and homelessness, although these may be offset by federal and provincial funding.
“Staff have been looking at various options that are in place in order to provide some cost containment in order to offset this fairly significant revenue shortfall,” Dyer said.
Cost-saving measures include service reductions, hiring freezes for about 70 non-critical staff and summer student positions and temporary layoffs for about 350 workers in areas such as transit services, regional libraries, museums and some clerical staff by early May.
Dyer said staff didn’t recommend going ahead with three planned expansions of Grand River Transit bus service
given the “dramatic” reduction in ridership and recent council-approved service reductions.
“We’re running at about 30 per cent of our normal ridership,” he said. “It seemed both impractical and illogical to proceed with service expansion this year.”
Not implementing those expansions would save $2.6 million this year. Also, 12 new buses ordered at a cost of $7.7 million will instead serve as replacement buses advanced from the 2021 capital program.
Regional council approved the report’s recommendations at Wednesday’s council meeting.
Coun. Sean Strickland cautioned that the region should prepare for greater pressure on the budget after the pandemic, and do everything possible to contain costs.
“While $2 million is significant, I think we’re going to have much bigger financial challenges ahead when all of these factors post-pandemic with respect to impact on economy come home to roost,” Strickland said.
He said it’s important to recognize that all municipalities across Canada are facing similar losses and will be looking to both levels of government for financial help.
“I’m not even sure the extent of this revenue shortfall for municipalities that the provinces are going to have enough fiscal capability to provide for that balancing of the budget after the COVID has passed,” Strickland said.
Kitchener estimates the pandemic is costing about $2 million a month in extra costs and lost revenue, said Mayor Berry Vrbanovic.
The Federation of Canadian Municipalities says cities across the country are on the brink of financial collapse and is asking the federal government for at least $10 billion in emergency funding.
The organization says there may be a need for more aid later, depending on how severe the pandemic proves to be, how long it lasts, and how many people fail to pay their property taxes.
If Ottawa agreed, the extra funding could mean as much as $80 million for the Region of Waterloo, and $24 million for the City of Kitchener.