City of Calgary facing $235M financial gap if pandemic continues through December

Click to play video: 'City of Calgary facing $245M financial gap if pandemic continues through December' City of Calgary facing $245M financial gap if pandemic continues through December
WATCH: Calgary city officials say the longer the COVID-19 pandemic persists, the wider the financial gap at city hall. As Adam MacVicar reports, the city is calling on the federal and provincial government for financial aid. – Apr 30, 2020

As several public health measures and large-scale closures to limit the spread of COVID-19 remain in effect, it could create a large financial gap for the City of Calgary, according to staff.

The numbers were presented to city councillors at a special strategic meeting of council on Thursday.

Council was presented with three budget gap scenarios based on the length of the pandemic.

The first scenario outlined a gap of $145 million, with the pandemic ending on June 30. That figure grows to $189 million by the end of September, but the budget gap could grow to $235 million if the pandemic persists until the end of the year.

Although the figures are better than expected, Nenshi said none of the scenarios includes financial impacts to the Calgary Police Service, civic partners like non-profit organizations, or the impact of Calgarians and businesses unable to afford property taxes this year due to the pandemic.

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“The $400-million deficit is still very much in the realm of possibility,” Calgary Mayor Naheed Nenshi said.

“But given that we’ve sharpened our pencils a little bit, it will likely be a bit less than that.”

According to the presentation, the city lost $21.5 million in revenue between March 12 and April 12, largely due to the closure of city-owned facilities and a reduction in ridership for the city’s transit service.

The city also spent $10 million on overtime pay and layoffs, as well as IT services, city administration said.

Around 668,000 bookings at city-owned facilities were lost due to the pandemic, and transit ridership has declined by 90 per cent, however there are still 100,000 users per day, city administration said.

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While the city does plan to make further cuts to find efficiencies, city administration said cuts alone would not be enough to close the financial gap, and could leave the city $26 million short if the pandemic lasts until 2021.

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“Certainly we are working hard on shaving the gap as best as we can, or narrowing the gap,” Nenshi said.

“These numbers are huge, and it’s simply not possible between now and the end of the year to make that up in cuts without having massive cuts to services like fire, police and transit – and so that is not really the way that we’ll go.”

Federal and provincial aid

Nenshi called on the federal and provincial governments to provide aid to municipalities dealing with budget shortfalls.

READ MORE: Alberta government considers allowing cities to budget for deficits amid COVID-19

He said Calgary has been the hardest hit municipality in the country as the city was climbing out of the downturn, as well as dealing with the impacts of an oil price war between Saudi Arabia and Russia as well as a global recession when COVID-19 began to spread locally.

“The federal government and provincial governments can borrow at essentially zero today, it’s all debt, so it makes way more sense for that debt to be held with them because they can borrow for way cheaper and they have other resources to pay it back, not just property taxes,” Nenshi said.

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The Federation of Canadian Municipalities (FCM) said cities will need between $10 billion and $15 billion over the next six months to pay for services while they see revenues decline, and have called on the federal government to take action.

According to Nenshi, Calgary’s share of that aid would be around $370 million.

Click to play video: 'Nenshi says province and feds need to step up to help municipalities overcome finances' Nenshi says province and feds need to step up to help municipalities overcome finances
Nenshi says province and feds need to step up to help municipalities overcome finances – Apr 15, 2020

Meanwhile, the provincial government said all levels of government are under enormous financial strain, but an announcement on funding for ready-to-go infrastructure projects is coming soon.

“We’re holding regular conference calls with municipalities to assess their needs, and we’ve announced several relief measures as a result of those conversations, such as extending reporting timelines, changing a regulation so councils can meet remotely, and deferring education property taxes for businesses for six months,” Municipal Affairs ministry spokesperson Timothy Gerwing said in a statement to Global News.

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“We’re also working with municipalities to develop lists of shovel-ready infrastructure projects that can move forward this construction season.”

City council will be discussing capital projects and infrastructure as well as municipal relief efforts at their next meeting on May 11.

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