Toronto faces nearly $900M hole in its 2021 budget due to COVID-19
Toronto’s proposed budget for 2021 relies on nearly $900 million in assumed funding from other levels of government as the city’s finances continue to be ravaged by the COVID-19 pandemic.
Staff say that they embarked upon this year’s budget process facing a staggering $2.2 billion shortfall but were able to reduce that number after finding $573 million in efficiencies, including tens of millions of dollars from freezing the salaries of non-unionized employees.
They say that the remaining $1.6 billion in financial pressures related to the pandemic can be offset through $740 million in Safe Restart funding that has already been secured and another $856 million in assumed funding that the city hopes to receive from other levels of government in 2021.
The city is also assuming that the federal government will come to the table with $61 million in funding to help cover the cost of providing shelter for refugees and that the province will provide it with an additional $16 million in funding for supportive housing.
In total, the shortfall equates to nearly seven per cent of the $13.95 billion operating budget released publicly for the first time on Thursday morning.
Staff say that if the federal and provincial governments don’t come to the table to help fill the hole, the “backstop” would be a combination of cancelling or deferring capital projects and borrowing from reserve funds.
The city is required by law to balance its budget and cannot borrow money to finance its operating budget.
“Very clearly our strategy is to balance the budget by asking for further financial assistance,” City Manager Chris Murray said during a budget committee meeting. “The alternative to this is to look very directly at our reserves and our capital program and take that kind of money from those areas. That also doesn’t rule out the possibility of higher taxation and other measures that might be needed if we are not able to get the provincial and federal governments to support us.”
The city faced $1.8 billion in operating pressures in 2020 due to the COVID-19 pandemic but was able to fully cover that loss through $534 million in savings that it found on its own and funding from a $19 billion federal fund to help provinces and municipalities restart their economies.
Staff say that in 2021 the TTC alone will face an additional $796 million in financial pressures due to the pandemic. The city will also have to fork out an addition $281 million in order to help maintain phsyical distancing in its shelter system.
“I don't have to stress with what has happened over the last year that this will be probably our toughest budget season we have seen or many of us have seen in recent memory,” Budget Chief Gary Crawford warned at the outset of Thursday’s meeting. “A lot of work has been done to make sure we are holding the line on tax increases while at the same time preserving services that our residents rely on.”