The City of London, Ont., continues to struggle with the massive financial impact of the novel coronavirus pandemic, but thanks to deferals, adjustments and cuts, the shortfall continues to shrink.
In late April, city staff estimated that the pandemic could deal a $33-million financial hit to the city by the end of August. That number is now down to $22-million thanks to measures taken — including staffing impacts and re-allocating 2019 surplus funds — and city staff are outlining ways to shrink the shortfall even further to around $7-million.
“The bottom line is we have a number of options that we have to approve, but if we approved all of them … by the end of August, we would still have a shortfall of about just under $5-million on the operating side in about $2.5-million on the water wastewater side of things. So $7.5-million total,” explained budget chair, councillor Josh Morgan.
“But that involves some significant service reductions and operational closures and other measures that are before council for consideration.”
Among the items council is being asked to consider is the deferral of some capital projects and deferral of some items in the strategic plan for 2021, as well as using half of the assessment growth funds.
Deferrals to capital projects include things like reduced tree planting and delaying improvements to some parks while items in the strategic plan that could be impacted include delaying the implementation of the proposed Bike Share Program, deferring infrastructure investments, and delaying street light improvements to 2021.
Morgan’s biggest concern, however, is with the staff recommendation to use half the assessment growth funds to help close the gap.
“Assessment growth dollars, these are, ‘guess what? The city grew. There’s new houses. So there’s new tax dollars coming in with those new houses and new subdivisions.’ There’s also new costs: we have to provide snow removal and garbage collection and fire protection and all of the different things. Assessment growth dollars — those new taxes coming in — are used to fund those new cost,” Morgan explained.
“So we’re proposing only funding half of those costs and potentially using the other half towards filling the hole that we have. That’ll be a problem, because essentially what we’re doing now is we’re not having growth pay for growth. We’re basically, you know, under-servicing the city as a whole by spreading ourselves both thinner on a number of these items or we’re simply not moving forward with components of them.”
Under provincial legislation, municipalities in Ontario are not able to plan to run a deficit.
“We can end the year in a deficit position — we can’t plan for one — but we can end the year in a deficit position but then we have to immediately take care of that with the next budget,” said Morgan.
“That means we have to raise taxes or cut services to balance that subsequent budget, so we can have a surprise deficit position but we can’t plan for one. So, in other words, we have to make those plans moving forward.”
Morgan adds that even if council approves all the additional measures staff are recommending, there’s still a $7-million hole as of the end of August and a whole other quarter of the year remaining.
“So it sounds like we’ve made some progress, but we still have a long way to go solve this.”
The staff report will go to the Strategic Priorities and Policy Committee at its meeting June 23.
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