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Coronavirus: Montreal unveils plan to cope with potential $500M shortfall

Watch: Montral officials provide update on impact of COVID-19 on city finances.

The City of Montreal presented its budgetary recovery plan on Thursday amid a global economic slowdown due to the coronavirus pandemic.

Montreal Mayor Valérie Plante says while the city is in good financial shape to weather the crisis, with a $251-million surplus from last year, the crisis will bring significant shortfalls.

“It is clear that our government’s finances will be affected by the global economic downturn due to the pandemic,” Plante said.

Executive committee president Benoit Dorais said the city’s revenues will take a big hit by safety measures and closures, amounting to as much as $538 million.

READ MORE: City of Montreal says its finances sound enough to face coronavirus crisis

He said an expected slow-down in real estate transactions could lead to a revenue shortfall of between $104.8 million and $294.1 million.

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That’s because a downturn in transactions would reduce transfer tax revenues, as well as various sources of revenues related to permits, parking fees and others, according to Dorais.

Montreal getting ready for post-COVID shutdown
Montreal getting ready for post-COVID shutdown

Plante said because of their reliance on property taxation, municipalities don’t have as much leeway as other levels of government when it comes to revenues.

Plante and Dorais expressed hope both Ottawa and Quebec would help shoulder the burden to minimize the impact on citizens.

“There is no question of handing that bill to Montrealers,” Dorais said. “Our commitment of not taxing residents beyond inflation will be kept.”

READ MORE: Landlords among most vulnerable homeowners during COVID-19 pandemic

The city also expects to see revenue losses in the form of expenditures directly linked to the crisis, such as the purchase of sanitary equipment or overtime for front-line staff.

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Another area of concern is public transit.

“There will be a shortfall on the public transit side with a bill that is expected to be considerable on the ARTM side, ranging from $154 million to $244 million,” said Dorais.

In total, revenue losses could range between $258.8 million and 538.1 million.

Dorais said the numbers were estimates only and that a clearer picture would emerge in the months following the end of confinement.

READ MORE: Coronavirus: Over 200 hand-sanitizing stations to be installed in Montreal Metro

To deal with the many shortfalls, the city is putting in place an action plan to curb spending and save $123.4 million.

City centre services will have to cut their 85.7 million expenditures, while boroughs will have to cut 3.1 per cent from their budgeted expenditures for a total savings of $23.7 million.

Boroughs and city departments will be required to come up with a detailed plan in the coming weeks, explaining how they will achieve those savings.

Meanwhile, the city is putting in place control measures aimed at slowing down expenses, including a hiring freeze, a freeze on professional fees, a general freeze on purchases and a freeze of $9 million in contingency expenses planned for by the administration.

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Both Plante and Dorais reiterated the measures were being put in place to allow the city to weather the crisis.

Coronavirus: Quebec government looks to slowly restart the economy
Coronavirus: Quebec government looks to slowly restart the economy