Municipalities facing billions in COVID-19 costs in 2021, Ontario fiscal watchdog says

Click to play video: 'Coronavirus: Ontario finance minister discusses funding for businesses amid Toronto, Peel lockdown'
Coronavirus: Ontario finance minister discusses funding for businesses amid Toronto, Peel lockdown
WATCH ABOVE: Ontario finance minister discusses funding for businesses amid Toronto, Peel lockdown – Nov 20, 2020

People in Ontario could face higher taxes or service cuts as municipalities face billions of dollars in COVID-19-related expenses, the province’s fiscal watchdog warned Thursday.

Financial Accountability Officer Peter Weltman said the pandemic will cost Ontario municipalities $6.8 billion over two years.

He also warned that while the joint federal-provincial restart agreement inked earlier this year provided a $4-billion relief, and municipalities will find some savings, a $2.4-billion shortfall exists for the coming year.

Barring further intervention from upper levels of government, the costs will fall to local taxpayers, he said.

Read more: Ontario’s unspent pandemic reserves grew to $12 billion by end of September: FAO

“Every municipality will be different, some will have more, some will have less, but nevertheless, there’s still a gap,” Weltman said. “The only way to make that up for municipalities is either cutting services, or raising taxes.”

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Municipal leaders have been calling for help from the provincial and federal governments to help with the funding shortage. Toronto Mayor John Tory called for a “Safe Restart 2.0” agreement for municipalities in a letter to Prime Minister Justin Trudeau and Premier Doug Ford.

“As we look ahead to 2021, it is clear that both our revenue shortfalls and additional expenditures to support vulnerable communities are likely to continue, for at least part of the year,” Tory wrote on Thursday.

Tory said the City of Toronto is forecasting a $1.5-billion deficit by the end of 2021.

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Read more: Ontario to release new COVID-19 projections Thursday

“That is after substantial savings in the hundreds of millions of dollars have been identified,” he said.

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Weltman said he anticipates municipalities will need to hear about any additional aide package over the next two to three weeks so that they can incorporate it into the budgets.

“I think the timing for them is now to understand what they’re going to have to do to mitigate whatever potential shortfalls are coming their way,” he said.

Municipal Affairs Minister Steve Clark said Thursday that municipalities will receive clarity on a second phase of funding before the end of the year.

“We’ll continue to work with all levels of government to support our municipalities, and leave no community behind as we head into 2021,” he said.

Meanwhile, Ontario reported a record 1,983 new cases of COVID-19 Thursday, and 35 new deaths due to the virus.

Read more: Ontario sets provincial record with nearly 2,000 new coronavirus cases

Health Minister Christine Elliott said 515 cases were in Peel Region, 496 in Toronto, and 208 in York Region.

In the province’s long-term care homes, 623 residents currently have COVID-19 and 24 new deaths were reported Thursday. The province said 118 of its 626 long-term care homes are experiencing an outbreak.

It also reported 139 new COVID-19 cases related to schools, including at least 111 among students. Those bring the number of schools with a reported case to 878 out of Ontario’s 4,828 publicly funded schools.

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The Ontario government was expected to release new COVID-19 projections later on Thursday.

The province’s chief medical officer of health said earlier this week that the data will indicate whether lockdowns in Toronto and Peel Region that started two weeks ago are working.

Projections released early last month suggested Ontario could see as many as 6,500 new daily cases by mid-December unless steps were taken to limit the spread of the virus.

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