Toronto faces financial hit of $65 million a week
Crisis-cut revenue and increased costs create a devastating blow
The City of Toronto is expected to see $65 million in weekly financial pressures during the COVID-19 outbreak — a devastating blow of lost revenues and increased costs that will require a bailout from other governments, internal documents say.
Losses in the hundreds of millions of dollars would be nearly impossible for the city to recover, because it legally cannot go into debt to pay for operating expenses. Council has for the past decade relied on rainy day reserves and a hot real estate market to balance the budget while keeping taxes relatively low.
“These are uncertain times for our residents and businesses and the City of Toronto government is certainly not exempt from these impacts,” city manager Chris Murray wrote in an email to managers and supervisors on Friday afternoon.
“We have seen a large reduction in revenue, stemming from reduced TTC ridership, a deferral of property tax and utility bills deadlines, and closures of services, among other things,” he said.
“As well, we have seen an increase in expenses with personal protective equipment, clean- ing and overtime needed to respond to this crisis.”
The news has also led to worries of layoffs of permanent workers as the city cancelled upcoming recreation programs and a the hiring of those seasonal workers.
An internal presentation and email from top city officials to senior staff and council members sent on Friday and obtained by the Star outlined the financial pressures.
It said the estimated weekly cost assumes a 90 per cent decline in key revenues, such as the TTC fares (estimated at $23.5 million), on and off-street parking ($3.9 million) and short-term losses from the Municipal Land Transfer Tax ($2.9 million) that could worsen — a loss estimated as high as $14 million for the MLTT — if the emergency is prolonged.
The “burn rate,” as city officials called it, also includes additional costs for child care ($ 7.7 million), shelters ($1.1 million), cleaning ($2 million) and overtime ($3.8 million).
The presentation said the city could offset those costs until June 1 by using surplus from 2019 and other measures, but other governments will need to step in.
The presentation also said the federal and provincial governments will be requested to provide “relief funding” to “offset the cumulative financial impact to city expenditures and revenues as a result of the pandemic emergency.”
Murray told reporters city staff will be discussing how to remedy that situation and keep council up-to-speed on the strategy moving forward.
“Sixty five million dollars is like two points of property tax for the whole year (added) every week,” Mayor John Tory told the Star on Friday.
“The TTC losing $20 million a week — if you spread that over months, you’re looking at hundreds of millions of dollars,” he said.
“If you look at the parts of our budget that we control in terms of revenue, it’s a huge number (of dollars) that we’re burning through every week, so we’re looking through the various options with this working group that we’ve set up.”
He said he’s been speaking to officials at other levels of government.