As efforts to slow the spread of the new coronavirus are eased, communities across Canada are confronting a difficult reality: how to pay for things like skating rinks, swimming pools, beaches and golf courses that people have come to expect from their local governments but that they may not be able to afford.
Mayors and city councillors are warning the economic shock from COVID-19 to their communities could be a deathblow if the federal government and provinces don’t provide help.
“This financial emergency is a direct threat to Canada’s economic recovery,” said Bill Karsten, a Halifax city councillor and president of the Federation of Canadian Municipalities (FCM).
There could also be significant cuts to city road maintenance, building repairs and new infrastructure projects, mayors say, plus reductions in essential services, such as policing and firefighting.
“We are in a dire, dire state,” Karsten said.
The FCM estimates the total financial hit to municipal budgets this year due to COVID-19 will be between $10-15 billion. Much of the shortfall comes from lost revenues – including about $400 million a month in lost public transit fees.
Some communities have also deferred property taxes during the pandemic, while incurring additional costs for front-line workers, personal protective equipment, and to make sure physical distancing requirements are met in public spaces.
The FCM has asked the federal government to make up this difference by providing emergency funding over the next six months so that cities and towns won’t be forced to cut services or raise property taxes.
Without this help, Karsten said, communities across Canada are facing the possibility of financial ruin.
Cuts to fire, police, infrastructure
Halifax is looking to cut $85 million from its current annual budget in response to COVID-19. This includes a possible $5.3 million cut to police and a $5.6 million cut for firefighting.
“This is a crisis. This is an emergency. This is critical,” Karsten said.
In Alberta, which has struggled financially with high unemployment rates following the drop in global oil prices, cities and towns have been especially hard hit because of the sudden collapse in revenue during the pandemic.
Edmonton’s mayor, Don Iveson, said he’s had to lay-off 4,200 employees and anticipates between $90-$260 million in losses due to COVID-19.
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And while the city has some rainy-day funds, these reserves will quickly be depleted, he said, especially if the pandemic continues.
“I’m down 500 bus drivers right now because demand is lower and I don’t have a way to hire them back when we turn the economy back on,” he said.
“Re-launch is going to be very challenging for cities across the country and we’re no exception to that.”
It’s not only bus drivers Edmonton can’t afford to hire back, Iveson said. The next round of cuts if the city doesn’t get help will include delaying building projects and putting-off repairs to basic infrastructure, such as filling cracks in city streets and fixing potholes.
“It’s maintenance like that (and) other unsexy things that we would have to start cutting back on to free up dollars to cover essential services,” he said.
Some of the city’s older skating rinks and one of its golf courses also may not reopen when measures meant to slow the spread of COVID-19 are lifted. This is because the cost of running these facilities is high, while the financial payout is low.
“Edmonton is in 73 different lines of business, from outdoor pools to fire and rescue, and all of them matter,” Iveson said.
“Some of them may not look the way they did before going into this, sadly, but they’re no less important to citizens’ well-being.”
Tough choices across Canada
Other municipal leaders have expressed concerns similar to Iveson’s.
Stony Plain, Alta, which has an annual operating budget of roughly $40 million, could see between $5-6 million in losses this year due to COVID-19.
Mayor William Choy said the town has already cut dozens of seasonal jobs, mostly connected to upkeep of outdoor spaces, such as parks and baseball diamonds, but added that everything is on the table when it comes to making the cuts necessary to keep essential services going.
“It’s a numbers game at this point,” Choy said.
Under normal circumstances, Stony Plain has a $1 million line of credit it uses to cover expenses when waiting for payments to come in. Because of COVID-19 and lost revenue from cancelled festivals and community events, plus deferred taxes and utility fees, the town has had to increase this to $10 million.
Without assistance, Choy said, short-term budget losses could turn into long-term cuts in services. He’s also worried prolonged closure of facilities and cancellation of events could mean higher stress levels and increased demand for mental health services.
“The biggest concern is that we would have to cut services that dramatically affect the quality of life for our residents to the degree that we might be harming our residents,” he said.
Garth Frizzell, a city councillor from Prince George, B.C. said his community could see roughly six per cent of its $100 million operating budget lost due to COVID-19. This will affect services and could cause some facilities, such as the city’s older swimming pool, to be closed for good.
Meanwhile, Jim Parsons, mayor of Corner Brook, NL said his city council already scrapped maintenance projects and reduced operating expenses for the year to the bare minimum.
Parsons said his community is in a relatively good financial position and has some reserve funds available, but like other mayors, he worries that if the pandemic continues, short-term losses could continue into next year, or even become permanent.
This is especially true for lost taxes from businesses that shut due to COVID-19 and may never reopen, he said, plus lost interest from investments and other income sources.
“What that means for next year is a bit scarier,” Parsons said.
So far the federal government has not indicated whether it will meet the financial request made by the FCM.
Global News asked the government what, if anything, it will do to support communities experiencing budget shortfalls and the threat of reduced services, including cuts to essential services like firefighters and policing.
A spokesperson for Deputy Prime Minister Chrystia Freeland’s office said the government is eager to hear provinces and territories’ ideas about ways to best help local communities.
“Our first priority is the health and safety of Canadians. We are committed to working with municipalities to ensure they have the support they need during this pandemic,” said Freeland’s spokesperson Katherine Cuplinskas.
She said Prime Minister Justin Trudeau, Freeland and Infrastructure and Communities Minister Catherine McKenna also remain in close contact with mayors from across Canada, including through the FCM.
“We are grateful for the leadership that all municipalities continue to demonstrate at this immensely challenging time,” Cuplinskas said.
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