Edmonton faces millions in lost revenue from COVID-19 closures

Economic impacts of COVID-19 are expected to last months and cost millions of dollars for the City of Edmonton, council heard Monday. 

Finance department estimates between $28M and $112M net losses, depending on duration of pandemic

The City will look at using some of its rainy day fund and delaying capital projects to make up for millions in revenue shortfall. (Natasha Riebe/CBC)

The economic impacts of COVID-19 are expected to last months and cost millions of dollars for the City of Edmonton, city council heard Monday.

Edmonton's chief financial officer Mary Persson and interim city manager Adam Laughlin said the city may be dealing with a $28 million net loss by the end of April.

That figure jumps to $61.1 million if businesses remain closed until mid-June, and $112 million if the physical distancing measures continue until mid-September.

Persson said the finance department came up with three scenarios evaluating the stymied economic activity: six weeks, three months and six months. 

"The impact of physical distancing means limited economic activity including for businesses, which is expected to drastically reduce production, travel and other demand-side factors driving consumer spending," Persson said. 

She said her team is not suggesting the city raise the 2.08 per cent tax increase for 2020 but a $28 million shortfall by mid-April would equal another 1.7 per cent tax levy and a $112 million shortfall would be a tax levy equivalent of 6.7 per cent. 

Mayor Don Iveson stressed that the city aims to hold tax increases at bay. 

"We want to demonstrate empathy and limit tax increases to the greatest extent that we can cause we know that people are under phenomenal, phenomenal pressure," Iveson said. 

Deferring utility payments, suspending parking fees and transit fares and closing rec centres all have an impact on the city's cash flow. 

"All of these lead to some pressures to ensure that we can keep everything going," Iveson said. "At this time, public safety remains our No. 1 priority."

He said the city will try to access funding from provincial and federal governments. 

Laughlin said the city will look at a combination of reducing expenses, using money from the financial stabilization reserve and pausing some capital projects to redirect the money to operating expenses. 

The largest revenue shortfall would be in transit and community and recreation facilities. 

With transit users now not paying to ride buses and the LRT, the city is heading for a $9-million shortfall by mid-April in its transit budget, which would balloon to $54 million by mid-September. 

The city closed recreation and community centres on March 14. A six-week closure would mean the city loses $8.5 million, which would rise to about $38 million if the closure lasts until mid-September.

Tax delays

Also Monday, council agreed to amend tax bylaws to give property owners in business improvement areas until Aug. 31 to pay. The deadline was March 31 but the city recognized some would be too financially strapped to pay. 

Property owners will have until Sept. 30 to pay their taxes, an extension of the Aug. 31 deadline that city council previously agreed to.

Taxpayers on monthly payment plans may request a delay in making those payments between April and August or later, council agreed. 

Laughlin stressed that deferred or delayed taxes doesn't mean they are eliminated. 

Deferring tax payments will mean less cash flow for the city so Laughlin encourages anyone who can, to pay. 

"You won't be facing a backlog of bills when the COVID situation improves," Laughlin said. "And you'll be providing resources that will help the situation."