Politics·MINORITY REPORT

Cities are on the front lines of the COVID-19 fight, but they're running out of money fast

Canadians have endured ten weeks of emergency health measures, lockdowns and social distancing requirements, but as the economy begins its slow return to life cities across the country are facing a COVID-19 cash crunch.

Cities across Canada expecting spike in property tax defaults

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Ten weeks. 

Ten weeks since the 'start' of the pandemic in this country, or more specifically, the start of travel restrictions and emergency health measures.

Doesn't it feel like ten years? 

I feel like we've lived ten lives in those ten weeks.

There's been more news since this started than I've ever experienced in my time as a journalist. People have needed help, and to know how to access that help. I'm not sure I've ever felt like getting the news out to Canadians is as important as it is now, at least, in my experience. 

And the help has come pretty fast and pretty furious. The list of financial aid announcements for businesses small and large, for people who lost their jobs, for students and seniors, is a long one. As the weeks have gone on by, there's less to announce. Tweaks here or there, but the majority of the government's plan to address the acute needs generated by the shutdown of the economy have been revealed. 

You can see that this week, in plain sight, during the prime minister's press conferences. An appearance in front of the cameras just to say the applications for this or that program will open, another to talk about the importance of testing. C'est tout. 

As I watched the actual announcements dwindle over the past week, I started to think about what's missing or what's left. 

The big unanswered question right now is; where is the help for municipalities? They are in trouble. Big trouble. Their revenue streams; think property taxes, and service fees, have dried right up.

WATCH: Vancouver's mayor discusses the cash crunch his city is facing

Vancouver mayor Kennedy Stewart says cities across Canada are facing massive revenue shortages due to the COVID-19 pandemic. 6:52

"We're seeing decreasing revenues, but also, what I'm really scared about, is property tax defaults," Vancouver mayor Kennedy Stewart told me last week. 

"I mean that is the lifeline of municipal finances ... property taxes, and I've been doing polling here in Vancouver that shows we are going to have a much higher level of property tax defaults."

According to mayors of the following cities:

  • Toronto is losing $65 million a week.

  • Vancouver will be short anywhere from $110 million to $330 million this year.

  • Edmonton expects losses anywhere from $90 to $260 million.

  • Calgary is losing $15 million dollars a week. 

And those are just some of the bigger cities, smaller ones are feeling the pain too and there are already consequences. All of the cities listed above have made layoffs. The City of Edmonton has laid off 4,200 people, Quebec City has laid off 2,000, Toronto won't hire 5,400 seasonal workers and Calgary has laid off 1,800 people. 

Toronto mayor John Tory put it starkly on Friday, arguing it would take a 47 per cent increase in property taxes to make up the shortfall, that or steep cuts, like a 50 per cent shutdown of the TTC.

"I find these cuts completely unacceptable even to contemplate," Tory told reporters. "But it's the reality of where we sit today."

Right from the beginning of April, mayors from across the country started flagging the issue of a major cash shortfall, saying provincial governments, which have jurisdiction over municipalities, probably would not be able to help as much because they're facing massive shortfalls too.

Next up: you guessed it … the federal government.

The conversations between mayors and Deputy Prime Minister Chrystia Freeland, I'm told, have been frequent and somewhat encouraging. But when I asked Tory if the encouraging signs were leading to explicit assurances, he was pretty clear.

"Explicit assurances, no, encouraging words, yes," he said. "But I can't take encouraging words to pay for child care, transit, housing … I need more than encouraging words. I need some explicit assurances and so do the other mayors."

Part of the hold-up may be the scale of the problem. The Federation of Canadian Municipalities estimates cities will need a $10 billion emergency fund to help stabilize their budgets (remember, most of them legally can't run deficits).

That's a lot of money, and though the prime minister hasn't been holdin' tight on the ol' purse strings, he also hasn't dropped any major hints the money is coming anytime soon. In fact, I've listened to his answers every time he's asked about cities; he acknowledges the need, says provinces have jurisdiction and then says he's open to conversations.

That's different from the answers Trudeau gave previously, let's say, when he was asked whether help for students and seniors would be announced. In those instances, he was explicit: help is coming. 

WATCH: Calgary mayor Naheed Nenshi on his city's need for financial support

Calgary mayor Naheed Nenshi says his city is looking at a budget deficit of between $150 million to $400 million this year due to the COVID-19 pandemic and cities can't run deficits. 9:42

Calgary mayor Naheed Nenshi refers to the issue as a "hot potato."

"The hot potato of: 'no this is your responsibility, no this is your responsibility' that governments love to play in Canada … meaning that nothing ever gets done."

"Well that hot potato's gotta get caught."

I am told, that behind the scenes, the plan is for Ottawa to catch the hot potato or at least make sure it doesn't burn anybody. The discussion around how to do so, has been part of both this week and last week's calls between the country's premiers and the prime minister. 

On the Federation of Municipalities' pitch for direct federal help, like through the gas tax, I'm told the feds are considering it but envision provinces will have to play some part. Plus, the gas tax itself might not even be enough. 

Remember, the services cities deliver: picking up garbage, recycling, providing ambulances, sewers, water, firefighting and so much more. They're on the front lines of what we need to stay healthy to reopen economies; and at this point, ten long weeks into the shutdown, those two things couldn't be more important. 


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