HRM to vote on $85M in budget cuts in response to COVID-19
Various capital projects delayed; major cuts to libraries, fire and police departments
The Halifax Regional Municipality is proposing more than $85 million in cuts to the city's 2020-21 budget in response to the financial impacts of COVID-19, and is warning its financial challenges are only going to get worse.
In 2020, Halifax's gross domestic product is expected to decline by nearly six per cent. Employment is projected to fall by 18,000 and income levels by 6.2 per cent.
"We need to be very cautious and very, very prudent in our financial planning," said the city's CAO, Jacques Dubé, during a special meeting of the board of police commissioners Monday.
The budget was approved in February, but the pandemic reached Nova Scotia before it could be ratified in March.
Since then, there's been a dramatic drop in municipal revenues.
Staff estimate HRM's revenue loss in 2020-21 to be $44 million, including $20 million in transit fares. That presumes transit ridership will not return to normal at any point this fiscal year.
Another $5.7 million of those losses are attributed to recreation fees from spring and summer programs that won't be collected.
In addition to $44 million in revenue loss, charges on the city's debt bring the 2020-21 budget shortfall to $85.4 million.
The major question mark facing the city right now, said Dubé, is how many people will be able to pay their taxes in October.
"I can assure all of you with certainty right now that next year will be worse than this year," he said.
While the city has the option of taking out a loan from the province, that money will have to be paid back.
Dubé believes it will be two to three years before the financial issues are alleviated, but even then, he believes the city's new normal will be completely different from the strong financial position it was in before the pandemic.
Cuts to libraries, fire, police
To bridge much of the gap, staff are recommending $60.4 million in budget reductions. The remaining $25 million will come from a reduction in "capital from operating."
The operating budget for Halifax Public Libraries will be axed by more than $1.1 million.
Halifax Regional Fire and Emergency are looking at a cut of almost $5.4 million, while Halifax Regional Police will see a reduction of more than $5.5 million.
Police Chief Dan Kinsella told the board that about 97 per cent of his budget goes toward salaries and benefits. For the cuts, he suggested not filling 28 vacancies and retirements. Of those, 17 are sworn officers, while the other 11 are civilian positions.
He told the board emergency calls will always be a priority and criminal investigations would continue to be fully staffed. Kinsella said they would make staffing decisions on remaining matters.
"I think it's self-evident that there will be some work that isn't being done," he said. "My job is to ensure that I respond to the priority issues and then cover the other areas where I can. I will continue to do that with the staffing we have."
His proposal drew questions from the board, who deferred a decision to approve the plan. In an unusual move, they instead recommended Kinsella speak with the union before the matter is voted on.
Halifax Transit increase
While the board considers the cuts, other departments are facing their own challenges.
Planning and Development will see a drop of $2.2 million. Transportation and Public Works is set to lose $7.1 million.
Halifax Transit, however, will see its operating budget increase by almost $8 million with the decrease in ridership the major portion of the change.
HRM laid off 1,480 casual, term and temporary employees who could not work from home, and notified other employees they wouldn't be called back for seasonal work.
Delayed capital projects
The overall capital budget for 2020-21 year will be reduced by more than $53 million. Some capital projects are delayed as physical distancing slows development and increases costs.
Nearly $2.9 million for a new/expanded transit centre has been put on hold, along with $300,000 for the West Bedford Park and Ride.
Money budgeted for the Bedford library replacement ($250,000) has been scrapped, along with $150,000 to improve accessibility in HRM facilities.
Fire station replacements ($5.6 million) have been cut, as well as $2 million for Downtown Dartmouth Infrastructure Renewal.
The Cogswell Interchange redevelopment looks like it will be put on hold, with just $750,000 allocated. That's down from $27 million.
The proposed changes will be voted on in a special budget meeting on Tuesday.