Municipal revenues have plunged due to pandemic
Mayor looks to senior governments amid warnings of $235M shortfall
Calgary is staring down a possible $235-million hole in city coffers this year — and there are likely more funding shortfalls to come.
City council looked at several possibilities for their financial future Thursday, with a gap that gets wider the longer public-health restrictions last during the COVID-19 pandemic.
In the best-case scenario presented to council, if Calgary’s local state of emergency lasts two more months, the city faces a $145-million shortfall.
If it goes until the end of the year, that number jumps to $235 million.
And that’s before factoring in money civic partner non-profits are losing, lost property tax revenue from homeowners and businesses who won’t be able to pay, and the fiscal hit to the Calgary Police Service.
An internal city document previously obtained by Postmedia estimated that civic partner agencies such as the Calgary Public Library, Calgary Zoo and Arts Commons could lose a combined total of $131.9 million of revenue over the next year.
The new numbers laid out for council Thursday aren’t quite as dire as a previously projected operating shortfall of up to $400 million for 2020, but city officials warned that still isn’t out of the question.
“The gap is big,” city manager David Duckworth said.
“We were having difficulty as an organization, as a city, as a province, PRE-COVID. It’s much worse now.”
Canadian municipalities are calling for the federal government to roll out an aid package specifically to help cities weather the fiscal storm of COVID-19. Because cities including Calgary can’t run a deficit, they face an impossible situation in 2020 as they try to make up the financial ground from major revenue streams such as transit fares virtually drying up. At the same time, city chief financial officer Carla Male said demand for most city services is steady, or even increasing, despite the pandemic.
The Alberta government has floated the possibility of giving cities the temporary power to run a deficit. Mayor Naheed Nenshi said while that might help in the short term, it will mean raising taxes in the future when the community is trying to recover from the crisis, and the better option is direct financial help from the provincial and federal governments.
In Calgary, transportation general manager Doug Morgan described the city’s public transit shortfall as “catastrophic.” There are still 100,000 people riding the bus and Ctrain every day — down from around 600,000 daily users.
This year’s transit losses, Morgan said, could push $90 million.
The city has already laid off about 10 per cent of its workers, most of whom would have been working in recreation centres and rinks that are closed.
Transit service has also been reduced across the system to match the drop in ridership, and property taxes and utility bills can also be deferred past their deadline for Calgarians who need more time to pay.
Nenshi said cuts alone won’t be enough to fix the city’s problems during the current crisis.
“We’re looking at cuts everywhere. Right now we’re in an emergency, and empty symbolism is not what I’m interested in,” he said, pointing to people who might push to cut any funding to arts organizations as a way to save money.
“Even if we did, it would solve maybe one per cent of our problem — 99 per cent is still out there even if we got rid of the whole darn thing.”
Council voted in favour of a handful of additional relief measures Thursday, taking money out of different reserve funds to remove fees for some development permits and business licence renewals.
Further aid pulled from reserves is still on the table, including $6 million for community associations and $15 million to help the city’s partner non-profits. Council will revisit that on May 11, when they’re due to talk about what COVID-19 means for their capital budget.
As the province announced the roadmap for opening the economy Thursday afternoon, Nenshi said that will also guide the city’s approach to the coming months.
Golf courses will be allowed to open as early as Saturday, but Nenshi said there’s “no way” the city’s facilities will be ready by then. “We’ve laid people off. Those are the people who would be prepping the greens.”
“The gap is big,” city manager David Duckworth told city council on Thursday.