Cities 'bleeding' cash because of COVID-19 could be next financial domino to fall for federal government
OTTAWA - After committing more than $200 billion to keep people and their businesses financially afloat, the federal government could have to write another multi-billion dollar cheque for Canada's cities, which are hemorrhaging cash because of COVID-19.
Toronto's Mayor John Tory announced Friday that 5,400 seasonal employees the city usually hires for recreational programs won't be hired, because the programs are being cancelled for public health reasons.
He said the city can't bring on more people for programs it won't be running. He said between rising expenses for public health and other departments, as well as millions in lost revenue, the city is bleeding money.
"The burn rate is $65 million per week, because the city is so big and obviously has finances that accompany the city that is the biggest in the country," he said.
Toronto's own health officials say they expect the crisis to last a minimum of 12 weeks, which would mean the city will burn through nearly $800 million. Toronto's annual operating budget is $13.5 billion.
Toronto's transit system is still running, but most passengers are staying home and Tory said that is one of the biggest hits.
"The first $20 million is from transit revenues not taken in, by passengers who are not using the transit system."
He said there are a whole host of other financial hits, from reduced parking fines, to increased overtime costs, higher cleaning expenses and lower permit revenues, even $500,000 a week in lost admission revenue from the Toronto Zoo.
Edmonton Mayor Don Iveson, chair of the Federation of Canadian Municipalities Big City Mayors' caucus, said municipalities right across the country are dealing with the same problems.
Iveson's city issued temporary layoffs to 2,000 people this week, mostly people who work in closed libraries and recreation centres. The City of Calgary has laid off 1,200 workers and Windsor, Ont. has let 500 staff members go.
Most municipalities in Canada are required to run balanced budgets, which means unlike the provincial and federal governments they can't simply borrow through this crisis.
Iveson said cities across the "country have delayed property taxes and utility bills to help businesses, but that means eventually the municipalities will run out of cash.
"We have looked at our cash flow in the City of Edmonton and we start to crunch very seriously by October, without some extraordinary relief for our extraordinary costs."
Iveson said the city also has to keep some services running to help with the pandemic. He said financially, it would make the most sense to shut the transit system, but nurses, doctors, grocery store workers and cleaners all need to get to work.
"They don't all have cars to get to their work and their customers don't all have cars to get to their stores."