COVID-19 could deal $33M financial hit to London by end of August, city staff project

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A report going before London city councillors next week paints a stark picture of the financial impacts the COVID-19 pandemic is projected to have on the Forest City.

As a result of additional pandemic-related costs, lost revenues, and relief measures to help struggling Londoners, city staff are projecting a potential hit of up to $33 million to the city’s budget by the end of August if things remain the way they are, according to a new report released Wednesday.

READ MORE: Coronavirus: London city council approves deferral of final 2020 property tax payments by 60 days

Staff note the projections could vary significantly as the pandemic continues, and don’t include potential budgetary impacts that could come from a prolonged pandemic or economic recession, such as property tax write-offs, and delayed or potentially lost construction-related revenue.

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According to the report, the city is projected to take a $12 million hit alone through the London Transit Commission by the end of August as a result of lost fare revenue, as well as costs related to increased bus cleaning.

Other major financial impacts listed in the report include:

  • Reduced investment income due to the Bank of Canada’s interest rate reduction ($3.1M);
  • Lost water and wastewater revenues due to lower water consumption, and the deferral of a 3.5 per cent wastewater rate increase ($2.8M);
  • Additional policing costs to cover overtime, personal protective equipment, and new technology to support remote work ($2.6M);
  • Lost gaming revenues from the closure of Western Fair ($2.6M);
  • Reduced parking-related revenues ($2.6M); and
  • Lost revenue from the city’s hotel tax ($1.7M).

“Based on the magnitude of the financial impacts known at this time, it is anticipated that a budget deficit will occur in 2020,” states the financial update from City Manager Lynne Livingstone and City Treasurer Anna Lisa Barbon.

The Municipal Act bars municipalities from running operating budget deficits and issuing debt, so any unfunded deficit from this year will have to be carried over to next year’s budget to be funded, the pair write.

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In a bid to reduce the impact to the 2020 budget, the report proposes the city rein in spending this year on discretionary items, like training and new office equipment. A similar recommendation is made to all agencies, boards, and commissions who receive funding through the city.

The report’s recommendations to soften the financial blow also include transferring $3.2 million from the 2019 budget surplus into the city’s contingency reserve, and delaying some of the city’s planned capital projects beyond 2020.

The other opportunity that we’re looking at right now is to look at [assessment growth],” said Barbon in an interview.

“Normally we would allocate assessment growth. We’re looking to hold that back to potentially fund, on a one-time basis, additional costs this year, noting that we would still continue to allocate for urgent, essential projects that need to go forward. And this is done on a business case basis.”

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Staff are recommending any longer-term measures to mitigate the pandemic’s effects beyond 2020 be addressed during next year’s budget update process, the report says.

READ MORE: Thames Valley board to postpone Grade 8 and 12 graduations amid coronavirus pandemic

During a COVID-19 media briefing with the Middlesex-London Health Unit on Wednesday, Mayor Ed Holder asserted that essential city services would continue despite the pandemic’s financial toll.

“These services are deemed essential for a reason,” Holder said. “And that is critically important that, despite these unprecedented costs, we are not going to hike property taxes beyond those which have already been approved. That would be counterproductive.

Council on Tuesday voted by a slim margin to distribute the 4.4-per cent tax increase approved during budget talks by a ratio that would see residential taxes rise 2.5-per cent and commercial rates rise 5.2-per cent.

Councillors also voted to defer the due date for final 2020 property tax installments by 60 days.

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City politicians have also recently endorsed waiving the per bag fee for bagged garbage at the city’s EnviroDepots until early May, and voted to give local businesses operating under Food Premises and Personal Services licenses, and taxi drivers and owners three more months to pay licensing fees.

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To further help local residents and businesses, staff lay out several additional immediate relief measures in the report that council could rubber stamp, including:

  • Offering loans to Londoners for rental arrears, first and last month’s rent, and utility arrears ($325K);
  • Deferring rent payments for tenants of City-owned properties for 60 days (no impact);
  • Implementing an emergency benefit for low-income Londoners to purchase COVID-19-related items like protective equipment and cleaning supplies ($1.6M+);
  • Expanding a Rogers-led program that provides low-cost internet to London Middlesex Community Housing tenants to another 1,500 households for three months ($45K);
  • Extending to 60 days the payment terms for city invoices issued to customers in May, June and July for services like by-law enforcement, fire services, garbage collection services, waste diversion, and others (minimal impact);
  • Extending the remittance period for hotel tax revenues to 90 days, temporarily (no impact); and
  • Directing parking officers to offer more flexibility when it comes to loading areas in and around the downtown core.

“Several of these ideas are actually taken from the first summary report that we provided on the Mayor’s Economic Impact and Recovery Task Force, as well as the Social Impact and Recovery Task Force,” Holder said.

“I’m hopeful that council colleagues will give them their due consideration.”

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The city also plans to advocate and lobby upper levels of government to secure support maintaining critical services, helping the city’s vulnerable, and aiding the rebound of London’s economy, the report says.

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Staff say several items brought forward by the community to the task forces line up with those advocacy priorities, and as a result, are recommending Mayor Holder be directed to send the task force report to Queen’s Park and Ottawa.

“Civic Administration will incorporate the valuable local insights brought forward by members of the community through the task force process,” the report states.

“These local examples, perspectives, and ideas are critical as federal and provincial governments continue to roll out initiatives aimed at supporting the City and Londoners.”

The staff report will be discussed at the April 28 meeting of the Strategic Priorities and Policy Committee.

Questions about COVID-19? Here are some things you need to know:

Health officials caution against all international travel. Returning travellers are legally obligated to self-isolate for 14 days, beginning March 26, in case they develop symptoms and to prevent spreading the virus to others. Some provinces and territories have also implemented additional recommendations or enforcement measures to ensure those returning to the area self-isolate.

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Symptoms can include fever, cough and difficulty breathing — very similar to a cold or flu. Some people can develop a more severe illness. People most at risk of this include older adults and people with severe chronic medical conditions like heart, lung or kidney disease. If you develop symptoms, contact public health authorities.

To prevent the virus from spreading, experts recommend frequent handwashing and coughing into your sleeve. They also recommend minimizing contact with others, staying home as much as possible and maintaining a distance of two metres from other people if you go out.

For full COVID-19 coverage from Global News, click here.