COVID-19 forces Halifax council to make severe budget cuts during economic downturn

The 2020-21 Halifax Regional Municipality budget was all set for a final vote of approval in March but then the COVID-19 pandemic hit Nova Scotia.

Halifax CAO Jaques Dube said the municipality is experiencing severe cash-flow issues and tremendous revenue losses already due to the pandemic.

In a special budget meeting held online, Dube painted a stark picture, suggesting the long-term financial impacts of COVID-19 will only get worse for years to come.

“This has been an incredibly challenging time,” said Dube. “I don’t think any of us has experienced something like this.”

According to the staff report, Dube says the municipality will see a $44 million shortfall this year with $20 million of that coming directly from a loss from transit revenue.

Since the pandemic hit, transit has offered free services, while parking fees at meters have been waived.

To make matters worse, Dube said the municipality will be cash-strapped because many businesses and residents won’t be able to pay their taxes on time.

Residential and commercial tax payments have been deferred and are estimated to result in a $188 million economic shortfall that won’t be immediately recovered by the municipality, resulting in cash flow shortages.

“If people and businesses are having a hard time paying taxes now it will only worsen next year,” said Dube. “Unfortunately, some businesses won’t come back.”

The unemployment rate in Nova Scotia is at 12 per cent, with 50,000  jobs lost in the hospitality and service industry — and those jobs are mainly in the HRM said, Dube.

HRM will look at securing a short-term loan of $188 million from the province to help with the lack of tax payments coming in during the pandemic. The loan has a three-year repayment period with an interest rate of 1.1 per cent, which council will need to approve first.

As council begins the budget recast process, their commitment is to find $85 million in cuts to help bridge the economic gap, said Dube.

Some of the proposed budget cuts include $5.3 million in cuts to fire and emergency budget with another $5.5 million in proposed cuts to policing budget.

Transportation and public works budget will see a $7.1 million trim and the library will see a $1.1 million hit in reduced revenue.

Transit service stands to lose $20 million because its no longer collecting fares during the pandemic, will receive a $7.9 million increase to its budget to continue to offer the service, while staff suggests fares will be collected again come June.

Although there have been no layoffs of full-time staff, Dube hinted there could be some in the near future in the customer services department.

A proposed $6 million budget reduction to corporate and customer services unit could see layoffs with the closure of the customer service offices at the Duke Street and the Acadia Centre locations, potentially affecting six staff members.

In April, HRM laid-off more than 1,400 casual, seasonal and part-time workers and Dube said further layoffs could be examined later.

The budget committee will reconvene Wednesday at 1:30 p.m.