City looks to provincial budget for stability and to fill COVID-19 gaps

Cities say they have exceptional one-time costs, but also need stable long-term funding for big-ticket items

CBC.ca
March 24, 2021

As COVID-19 persists into its second year, city officials across Ontario will be looking to Wednesday's provincial budget to shore up their financial shortfalls for 2021 and provide funds for a post-pandemic economic recovery.

"Stability would be that key word," says Graydon Smith, president of the Association of Municipalities of Ontario (AMO), when asked about what local governments need most from the province.

The COVID-19 crisis has closed most municipal buildings and shut down programming, thereby reducing their revenue -- in particular in big-city transit, where ridership has plummeted. At the same time, cities have spent more money on social services, enhanced cleaning, long-term care homes and public health.

OC Transpo to suspend some suburb-to-downtown routes
City facing $153M deficit for 2021 if COVID-19 lasts another year
The 444 municipalities in Ontario are facing a $2.7-billion shortfall for this year, and closing that gap is the No. 1 concern for them all, including Ottawa.

In 2020, the provincial and federal governments each provided $2 billion to municipalities in Ontario to cover the financial chaos caused by COVID-19. That money was enough to cover Ottawa's $181 million shortfall last year.

Late last year, Ottawa's treasurer was predicting a deficit of $153.5 million related to COVID-19 in 2021, should the pandemic continue for another 12 months. It's clear that the effects will continue for some time, but the treasurer's office hasn't yet updated the financial outlook for Ottawa.

The province did announce $500 million in early March as bridge financing for the municipalities for 2021, a commitment that Smith characterizes as a "kind of down payment" and calls on the federal government to match.

About $50 million of that 2021 provincial money is earmarked for Ottawa -- $33 million for city operations and an additional $17 million for rider-starved OC Transpo -- but it's clear the city will need a top-up to be in the black or else have to make deep cuts in service.

"We have picked up more of the slack in recent years in terms of that cost sharing arrangement with the province," says Smith. "But if anything has been underlined in this, one of the things is that public health is vitally important to the health of our communities and not only during a pandemic."

Ottawa Public Health will need funds from the province to pay for local vaccination centres, like this one at Eva James Memorial Community Centre. (Jean Delisle/CBC)
During its financial deliberations last fall, Ottawa Public Health had budgeted an extra $24 million for 2021 -- and that did not include the cost of running vaccination clinics, which have required hundreds of additional hires.

AMO applauds the province for its $500-million Social Services Relief Fund last year, but calls for it -- and other extra funding for long-term care homes and personal support workers -- to be extended past the fiscal year of Mar. 31.

Ottawa will also be looking for a commitment to funding affordable housing. Council recently approved its first-ever long-term financial plan to deal with housing and homelessness, which call for a $585-million investment in the nextt decade, shared equally with the provincial and federal governments.

To that end, the city would be looking for regular contributions of $20 million a year from the province.

The city's 10-year housing and homeless strategy calls on provincial and federal governments to each contribute about $20 million annually. (Andrew Lee/CBC)
Looking to post-pandemic recovery
In their budget submission to the province, Ontario's Big City Mayors, of which Ottawa Mayor Jim Watson is a member, advocated for money to make municipalities whole financially, but also a plan to help the economy recover.

In particular, cities are looking for "a small business and tourism strategy to help ensure our hardest hit sectors bounce back," pointing out that the hospitality industry was "disproportionately affected" by COVID-19. They'd like to see a plan that encourages Ontarians to take vacations in the province this summer and fall.

On a more long-term and wide-ranging note, cities also want to see a continuation of infrastructure spending to keep local economies going.

AMO wants to see funding, such as the portion of the gas tax that the province pays to cities, stabilized over the coming years.

The Big City Mayors go one further. They advocate for "a one-time doubling of the gas tax, providing a shot in the arm to this year's construction season."

In 2019, the Progressive Conservatives cancelled a planned doubling of the gas-tax payments to the city, despite promising not to do so during the previous year's election.