The costs of COVID: 15-year recovery ahead for Edmonton region, council told
'Edmontonians are going to have to be patient with their city,' Mayor Don Iveson says
It could take more than 15 years for the Edmonton region to recover after the COVID-19 pandemic, finance experts told city council this week.
The city released a 'reimagine' plan Wednesday, outlining the present challenges and possible approaches to navigating the short-term and long-term recovery.
Interim city manager Adam Laughlin said before COVID, the city was already struggling from the 2015-16 recession, from which it didn't fully recover.
"In the next 10 years, it is highly unlikely for Edmonton to return to levels experienced in 2014 and prior," Laughlin told council Wednesday.
During 14 years of oil and gas booms between 2000 and 2014, the city expanded in structure, staff, and service to a size it can no longer afford, Laughlin said.
"There is a need to right-size and reform the city to correspond with this new reality."
By the end of this year, Laughlin predicts the city will be short $172 million on its $3-billion operating budget.
That's the probable scenario. In the best case, the shortfall would be $151 million, and in the worst case, the city could be short up to $252 million by the end of this year.
"The COVID-19 pandemic has changed and is changing our city permanently," Laughlin said after the council meeting. "Both the community and the local government that serves it."
In finding ways to reduce expenses and increase revenues, the city will look at reducing, cutting or privatizing services — public transit, mowing sports fields, fire services and collecting garbage. Laughlin said everything is on the table.
Eliminating services could be "part of the discussion," he said. "If we have a particular service that is a very high standard, in this tough economic time, should it be to that standard or should it be to a lower standard?"
Mayor Don Iveson supports administration's approach.
"Edmontonians are going to have to be patient with their city," Iveson said. "Understand that we can't get back to pre-COVID-19 levels of services in many service areas."
For example, he said reopening recreation centres with fewer people allowed in has increased the costs of running them.
"COVID distancing requirements are hitting our operations, like they're hitting businesses, like they're hitting other governments."
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The city will also explore options for the private sector to take over some services.
Laughlin noted that many businesses and residents will continue to struggle to pay property taxes this year and next.
"Significant tax increases are not an option in this environment," he said.
Jobs on the line
The city's 'reimagine' plan includes considering changes to workplace policies, salaries and positions.
The city's chief financial officer, Mary Persson, said as services are likely to be reduced, the costs to deliver them also need to go down.
That means reevaluating jobs, Persson and Laughlin both said.
The city will immediately start to study their staffing levels, referred to as full-time equivalents or FTEs.
"Wage settlements and personnel costs are the largest cost-drivers to the organization," Persson told council. "Under fiscal constraints, the city will need to review its FTE complement."
The city laid off 3,000 people in March and April as it closed recreation centres and libraries, provided free public transit and stopped charging for parking.
"These were the right decisions," Laughlin said, "and they had a price."
Increased cleaning on transit and buying more personal protective equipment also added to costs.
Of the spring layoffs, 350 people returned to their original positions this week.
Laughlin and his team are expected to present specific financial measures to council in the fall.