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New estimates suggest COVID-19 could cost City of Edmonton between $140M and $260M

COVID-19 could cost City of Edmonton between $140M and $260M
WATCH ABOVE: If the novel coronavirus pandemic continues into December, it could cost the City of Edmonton close to $260 million. Vinesh Pratap breaks down the numbers.

If the novel coronavirus pandemic continues into December, it could cost the City of Edmonton close to $260 million. That was described as the “worst-case scenario” by Mayor Don Iveson in a news conference on Wednesday.

But even the more likely scenario has worsened since previous cost estimates.

“These impacts are serious,” interim city manager Adam Laughlin said.

READ MORE: COVID-19 costs to City of Edmonton likely between $27M and $112M: report

Previously, the city said it could cost between $27 and $117 million. New numbers suggest the city could sustain a $140-million hit to revenues if shutdowns continue to mid-September.

LISTEN BELOW: Mayor Don Iveson talks about the financial loss the City of Edmonton could face

The shortfall is coming from the city’s decision to suspend things like parking and transit fees, closing recreation centres and also the unexpected cost of things like turning the Edmonton Expo Centre into a temporary homeless shelter and spending on educating the public around the dangers of COVID-19.

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City of Edmonton interim manager on impact of $140-260M revenue drop
City of Edmonton interim manager on impact of $140-260M revenue drop

That has led city council to have a number of conversations about how to offset that loss, including additional layoffs, cuts from the city’s infrastructure program and drawing from reserves.

“There are difficult decisions ahead and those decisions include spending reductions,” Laughlin said.

“I don’t want to sugar coat this. The executive leadership team and I are having frank and realistic conversations with mayor and council and our union and management partners about this very action. I know this will create more uncertainty for city employees.”

More layoffs coming within City of Edmonton: Mayor Don Iveson
More layoffs coming within City of Edmonton: Mayor Don Iveson

According to Laughlin, the temporary layoffs may greatly counteract the financial loss if the city stays around the lower $140-million scenario, as one of the city’s biggest expenditure is salary.

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Anyone who would be affected by that move would hear from the city first and would be offered supports like supplementary unemployment benefits, Laughlin said.

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But, if the pandemic continues to affect the city’s ability to operate for longer, the mayor says the City of Edmonton is going to need help from other levels of government.

“If you go past the September scenario and climb into the $200-million range, it gets harder and harder, especially later and later in the year, for us to make that back,” Iveson said.

READ MORE: Edmonton compiles $2B COVID-19 stimulus proposal for province

“If we knew that we were going to have support for that, we’d be able to make confident relaunch plans now, but it’s harder and harder to plan for the kind of robust relaunch that we’d like without knowing that our downside for all municipalities has been protected.”

Mayor Don Iveson describes how city would return to ‘business as usual’
Mayor Don Iveson describes how city would return to ‘business as usual’

The support Iveson is referring to is a request that many municipalities have made to the provincial and the federal governments for support. Municipalities are not eligible for the 75 per cent federal wage subsidy, but Edmonton has reached out to the higher levels of government for cost coverage.

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“We do hope that the provincial and federal infrastructure stimulus, when it comes, will allow us then to ramp back up without skipping a beat,” he said. “But I do need to highlight that there is now risk to our infrastructure program and our long-term asset conditions because of the need to cut costs.”

How COVID-19 will result in lower municipal taxes in Edmonton
How COVID-19 will result in lower municipal taxes in Edmonton

There is some good news for Edmonton’s residents who may already be struggling amid the ongoing COVID-19 pandemic. According to officials, council is working to decrease the property tax increase that was first introduced in December.

READ MORE: EEDC announces more layoffs, pay cuts and senior leadership departures amid COVID-19 crisis

“It’s important for Edmontonians to know that increasing taxes to make up for this shortfall is not on the table,” Laughlin said. “We don’t want to make life more difficult than it already is during these unprecedented times.”

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City of Edmonton interim manager thanks staff and residents for pandemic response
City of Edmonton interim manager thanks staff and residents for pandemic response

All the budget discussions have to be done by the end of April.

READ MORE: Union for Edmonton Transit workers calls for more protections against COVID-19

Iveson said there should be additional information about more temporary layoffs next week.

City of Edmonton and employee unions working together on layoffs
City of Edmonton and employee unions working together on layoffs
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