UPDATE: Ontario gives York Region more than $23M to mitigate COVID-19 financial impact

Yorkregion.com
August 13, 2020

After partnering with the federal government, Ontario rolled out Aug. 12 more than $23 million to York Region’s nine municipalities, with Markham and Vaughan -- the most populous -- receiving more than half of the total amount.

The funding is phase 1 of the Safe Restart Agreement, which falls under the bigger $4 billion relief dubbed by the government of Ontario as an "urgently needed one-time assistance to Ontario's 444 municipalities".

Markham will receive about $6.7 million; Vaughan, $6.2 million; Richmond Hill, $4.1 million; Newmarket, $1.8 million; Aurora, $1.3 million; Georgina, $1.2 million; Whitchurch-Stouffville, $1 million; East Gwillimbury, $662,300, and King Township, $574,400.

The announcement comes after commissioner of finance and regional treasurer Laura Mirabella said York Region was "hopeful" it would receive some financial support from the federal and provincial governments to help with COVID-19 recovery efforts.

While it’s expected that COVID-19 is costly to municipal, provincial and federal government budgets, as of June 30, the current financial impact is estimated at $63 million for York Region, according to a July 17 memorandum from Mirabella.

The COVID-19 financial impact figure is expected to mushroom from its current estimate to $173 million, Mirabella said in the memorandum sent to Regional Chair Wayne Emmerson.

"To date, the Region has received funding commitments from senior levels of government of approximately $6 million in 2020 to cover additional costs for social services, seniors, emergency housing and enhanced public transit cleaning," Mirabella said in an interview days before the Aug. 12 provincial announcement.

The call for help isn’t new. In June, Vaughan -- already considered to be in a better fiscal position than many municipalities today -- had its mayor urging provincial and federal governments to funnel $45 million into the city to help with recovery.

"All nine cities and towns in York Region are facing challenges associated with COVID-19, with these challenges likely to continue into 2021," Mirabella said.

In her report, she said COVID-19’s financial impact for York Region is expected to be $98 million in 2021.

"The approach assumes York Region would be in full recovery mode and impacts would be reduced," Mirabella said, when asked why the projected impact is lower for 2021.

"Affected revenues are expected to begin to improve, such as those in transit, court services and York Regional Police," she explained. "This approach lowered the estimate of weekly COVID-19 related costs to approximately half the 2020 amount, or $1.9 million."

York Region is "working with the most current information and remains cognizant these numbers are estimates only. We will continue to monitor costs throughout the coming months".

Laura Mirabella, commissioner of finance, sent to Regional Chair Wayne Emmerson and members of regional council a July 17 memo, detailing COVID-19's financial impact on York Region. (York Region photo)

HOW IS IT $63M?

Cushioned by a total of $165 million ($110 million in reserves and last year’s surplus of $55 million), the memo notes, “As of June 30, 2020, net expenditures for Regional programs were 97.9% of the budgeted amount for the period.”

This makes the “total costs and reduced revenues” reach up to “$62.64 million, or approximately $4.17 million per week, on average.”

The previous June 10 memo summarized the financial impact to be $129 million in 2020 based on a weekly impact of approximately $4.29 million, on average, and it assumed “emergency would last until the end of June and the recovery period would continue for another six months, until the end of the year.”

As the market gradually reopens and travel restrictions ease, the memo, meanwhile, warned of a second wave, which can pose as a “potential risk in the Fall of 2020,” requiring “continued response beyond previous assumptions.”

“If the current emergency lasts until the end of 2020 and the recovery period lasts through 2021, given a weekly burn rate of $4.17 million, the total impact is estimated to be $173 million in 2020 and $98 million in 2021.”

With York Region mandating face masks on July 9 to curb spread of COVID-19, these “figures reflect Public Health resource needs discussed in a June 25 report to Council and other expected grant revenues.”

As of June 30, the weekly total direct costs total about $42.52 million with a weekly impact of $2.93 million. These costs include payroll, such as staff-related costs resulting from COVID-19 (for example, overtime and additional staff), and non-payroll, including program costs incurred by public health and long-term-care costs.

However, the indirect costs, which include water management, transit, water and wastewater, court services, York Regional Police and community investment fund, total $19.11 million (or $1.24 million weekly).

MASKS, EDUCATION CAMPAIGNS

The memo noted council discussed funding masks for regional staff and residents, “to help the most vulnerable population with the transition,” as well as financing communication and educational campaigns about masks.

“Staff recently finalized a commitment to purchase 315,000 multi-use masks at a cost of $3.33 per mask, or approximately $1 million, which is reflected in the projected costs in 2020,” the memo stated.

“The figures also reflect a communication and education campaign, expected to cost between $323,000 and $428,000, as reported to Council on July 9.”

ON RISKS?

The financial impacts figures are “expected to be accommodated within department budgets by year-end by reallocating the use of budgeted resources and savings due to hiring deferrals and reduced spending in other areas” as well as money coming from “dedicated reserves.”

However, there are some lingering risks, which can create “year-end pressures,” emanating from reduced transit ridership, the “potential ongoing reduction in revenues for York Regional Police from fee-based activities, among other examples.

While “additional cost and revenue changes” are “not yet quantified,” this still could impact York Region financially.

“For example, the recent decline in economic activity may result in reduced assessment growth revenues. Potential delays to capital projects could also impact the Region’s capital plan and are being closely monitored.”

With courts in York Region not resuming in-person hearing before Sep. 11, Mirabella also clarified how the provincial government can help, not only in the form of financial assistance.

“There are a number of actions the province could take to provide longer term relief to support recovery efforts, including cancelling previously announced cuts, such as those to Public Health and improving how other cost-shared programs are funded,” she said.