Welcome to month three of COVID-19 and our quasi-Orwellian existence. Unless you have applied for one of the alphabet soup (CERB, CEWS, BCAP, CEBA, CECRA) of federal relief programs, the level of government that is supporting you the most is the City of Ottawa.
Even if you have retreated to total in-home hibernation and are getting all groceries, meals, packages and booze delivered to your front door, you still have dozens of weekly interactions with city services such as water and garbage pickup as well as your daily insurance policy of police, fire, paramedics, bylaw and of course, local public health. Moreover, your delivery drivers continue to rely on the city for road and traffic signal maintenance while front-line workers – picking your groceries or making your food – may still be using OC Transpo.
During my tenure as Mayor Larry O’Brien’s chief of staff, I saw first-hand the dedication and professionalism of city staff at City Hall and across Ottawa. And too often we take the scope of this massive 24/7/365 operation for granted.
The 2020 City of Ottawa budget consists of a $3.8-billion operating ledger and another $815 million in capital expenditures. Slightly more than half of that is funded from property taxes. Another 29 per cent is generated by fees and revenue-generating services, while the remaining 18 per cent consists of transfers from other levels of government.
Early on in this COVID-19 crisis, the city acted swiftly and responsibly by offering to defer tax payments and water bills. But this relief – along with declining revenues from OC Transpo fares, parking (on- and off-street) payments, bylaw fines (such as parking infractions) and recreation fees, among others – hasn’t helped the city’s cash position.
Now add in the extra costs for firefighters’ and paramedics’ overtime, higher affordable housing subsidies due to lost income, new expenditures at the city’s long-term care homes, more garbage (gross tonnage) pickup and a host of extra work by Ottawa Public Health.
Writ large, the city is losing $30 million each month in revenue, saving $11 million in some expense areas (less fuel, layoffs of seasonal employees, salaries and other expenses at recreation centres and libraries), and incurring $5 million more in new expenditures.
Bottom line: a burn rate (read: net loss) of $24 million each month.
Ottawa’s current and future fiscal picture is as uncertain as developing a coronavirus vaccine: fraught with risk and with no guarantee of a positive outcome. As a result, the city has established a finance task team led by its chief financial officer to look for in-year savings, review capital plans, monitor anticipated federal/provincial stimulus announcements and provide directions for the 2021 and 2022 budget cycles.
These directions need to reflect downward and permanent revisions to OC Transpo ridership due to understandable safety concerns, a return to personal vehicle usage, staggered office schedules that limit the number of employees on site at one time and the fact that some employers will permanently embrace working from home for a percentage of their workforce.
City and recreation facility revenue forecasts need to be drastically reduced over the short and medium terms, given prohibitions on mass gatherings lasting for the foreseeable future. Organized sports (hockey, baseball, basketball, soccer, ringette, etc.) along with packed gyms and late-night beer hockey are not returning in any measure in 2020 or for much of 2021.
Public health surveillance and frontline provision of direct and ancillary health services that fall under the city umbrella will no doubt get a one-time, if not permanent baseline, funding boost. In return, sobering scenarios of revised staffing levels – both management and unionized employees – should be included in these directions, especially since short-term tax and fee increases are likely. A raw, robust and responsible conversation among all stakeholders must occur as to what is truly essential in a post-COVID-19 world.
Finally, budget directions should account for a likely decline in the overall residential and commercial assessment base, which drives annual property tax collections. While property taxes from single-family homes should remain stable – at least until the federal deficit reduction shock (the subject of a future column) – property taxes from multi-residential, hospitality, commercial and industrial properties will flatten or could even decline given that a Canadian economy in depression will affect their revenue-generating potential and/or lower replacement-cost comparisons, in turn diminishing assessed values.
City budget debates are about to become much more important, inflamed and impactful in the years to come.
Walter Robinson is a government and public affairs executive who served as chief of staff to former Ottawa mayor Larry O’Brien in 2006-07.