Calgary

Calgary faces $235M budget shortfall, or more, due to pandemic

Best case scenario is the City of Calgary will have a budget shortfall of $145 million due to the pandemic, but that could balloon to $235 million if the shutdown stretches to the end of the year. 

Mayor and the city's CFO say cuts are not enough to make up for lost revenue and increased costs

Calgary Mayor Naheed Nenshi says it would be impossible to make up the city's budget shortfall through cuts. (CBC)

Best case scenario is that the City of Calgary will have a budget shortfall of $145 million due to the pandemic, but that could balloon to $235 million if the shutdown stretches to the end of the year. 

Those cost estimates do not include burdens borne by the Calgary Police Service, civic partners like the zoo and service agencies, or community associations. Those burdens include overtime, layoffs and facility cleaning as well as purchasing IT equipment and pandemic supplies.

From March 12 until April 19, the city lost $27.5 million due to the pandemic response. 

Calgary Mayor Naheed Nenshi said the $235-million figure is better than a previously anticipated shortfall of $400 million, but that the larger figure is still a possibility, particularly after police and civic partners are factored in.

Decreased transit ridership, the closure of recreation facilities, lower water consumption, reduced permit fees, overtime pay and more have all contributed to the constrained bottom line. 

Cuts coming

The city's chief financial officer, Carla Male, told council there are also risks on the horizon, including tax defaults, potential losses for civic partners and the fact there's no current estimate from Calgary police. 

Male also said service cuts will not be enough to close the fiscal gap faced by the city, but that more cuts are coming along with finding efficiencies, implementing a hiring freeze, using reserves and making capital changes. 

Calgary's budget shortfall could balloon to $235 million if the shutdown stretches to the end of the year, and that doesn't even include burdens borne by those like the Calgary Police Service. 2:57

Nenshi was even more blunt when speaking to the media outside council chambers.

"Certainly we are working hard on shaving the gap as best we can, or narrowing the gap," he said. 

"These numbers are huge and it is simply not possible to make that up between now and the end of the year in cuts without having massive cuts to service in things like fire, police and transit."

That, he said, was not realistic.

Other levels of government needed

Calgary Transit is one of the hardest hit business units in the city, thanks to its reliance on fares. It is facing an $89-million loss in revenues. 

Transit service will face further reduction, but transportation general manager Doug Morgan told council those cuts have to be balanced against overcrowding on limited buses and trains. 

Nenshi stressed the need for both the federal and provincial governments to borrow money in order to help municipalities weather the storm.

"It makes way more sense for that debt to be held by them because they can borrow for cheaper and they have other resources from which to pay it back, not just property tax," he said. 

Nenshi said the other option is to drastically increase property taxes in the city, which he said nobody wants to see happen in the midst of a crisis.

With files from Scott Dippel

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