City facing $192M deficit due to pandemic

The City of Ottawa is projecting a deficit of $192 million by year's end, and that could mean cutting some services unless upper levels of government pitch in, council heard Wednesday.

Help needed from upper levels of government to avoid service cuts in 2021, city manager says

OC Transpo alone is facing a revenue shortfall of $120 million, due largely to an unprecedented drop in ridership as thousands of people work from home during the pandemic. (Jonathan Dupaul/CBC)

The City of Ottawa is projecting a deficit of $192 million by year's end due to the ongoing COVID-19 pandemic, and that could mean cutting some services unless upper levels of government pitch in, council heard Wednesday.

City manager Steve Kanellakos told council the city has been in good fiscal shape over the past decade, but said "the pandemic has created a financial pressure we never could have prepared for," underlining the need for aid.

"We need help from the provincial and federal governments," Kanellakos said.

The city expects to lose $241 million in revenue due to the pandemic. The loss of fares due to a dramatic fall in OC Transpo ridership accounts for about half of that shortfall, or $120 million, according to city treasurer Wendy Stephanson.

(City of Ottawa)

Transit revenue has been particularly hard-hit as many workers, especially federal government employees, are expected to keep working from home in coming months.

Other areas where the city is losing money include:

  • Parks, recreation and cultural fees: $53 million.
  • Parking fees: $12 million.
  • Parking and red light camera fines: $15 million.

In addition, the city is incurring $77 million in additional costs due to the COVID-19 for measures such as additional public health staff and boosting housing for vulnerable populations. OC Transpo is spending $11 million on additional cleaning of buses and trains. And with everyone at home, there's more residential garbage to pick up, costing the city an extra $2 million.

The city has also saved money because of the lockdown — a total of $89 million. That includes $22 million by temporarily laying off more than 4,000 part-time workers, and another $16 million by keeping recreation centres closed.

The city has also received $37 million in assistance from provincial and federal governments. But even with that funding and those savings, the city is still expecting to be in the red by a whopping $192 million by the end of 2020.

Raiding reserves, putting off projects

Cities in Ontario are not allowed to run operational deficits, so Ottawa needs to find a way to close that significant budgetary gap.

Stephanson presented councillors with a high-level plan to balance this year's budget that involves raiding some of the city's reserve funds, as well as putting off $82 million in capital projects including certain transit and water and sewer services.

Ottawa "can get through 2020 … we can maintain and deliver our services" Stephanson reassured councillors.

There's an additional $78 million left over from various completed capital projects, money that will be put toward covering the operational budget gap this year. 

City staff assured council that the current fiscal hole will not significantly affect the ongoing LRT Stage 2 project.

The finance and economic development committee will hear more details about which projects will be put off on July 7.

City looks to provincial, federal governments for financial boost during pandemic

CBC News Ottawa

8 months ago
Mayor Jim Watson says the City of Ottawa has asked the provincial and federal governments for help to cover a $192M deficit caused by the COVID-19 pandemic, but hasn’t gotten a definitive response yet. 1:18

'They haven't said yes'

Stephanson was clear, however, that these measures aren't sustainable: "It does come at a cost of our organization," she told council.

Reserve funds will have to be replenished — for example, OC Transpo will borrow $87 million from reserve funds to get through the rest of the year, but the transit department will have to pay that money back at some point — and the city will want to catch up on its capital projects.

That's why municipal leaders across the country have been lobbying other levels of government for financial help during the pandemic.

Mayor Jim Watson, who has been lobbying the provincial and federal governments for financial help, told his council colleagues he's optimistic they'll pony up some funds, but conceded it's hardly a done deal.

"We haven't been told no, but unfortunately, we haven't been told yes," Watson said, encouraging councillors to press their own MPs and MPPs for financial assistance for the city. 

City staff begin to plan the following year's budget in the fall, and they need to know how much money the municipality will be receiving to make up for this year's shortfall. If the city doesn't get the financial help it's looking for, it will have to cut services or raise property taxes.