COVID-19 financial impact to Vaughan is $6.7M so far in 2021 -- just 37 per cent of previous year's total

Also, 2020 ended with surplus of $3.1 million in property tax supported operations

Yorkregion.com
Oct. 25, 2021
Dina Al-Shibeeb

As of June 30, the financial impact of COVID-19 incurred by Vaughan is about $6.7 million, about 36.6 per cent of the previous year's total of $18.3 million when stringent lockdowns were in place, the city told the Vaughan Citizen.

The foregone revenues of $6.7 million largely stem from areas in recreation, community development, bylaw and compliance, licensing and permit services.

“Incremental COVID-19 expenses totalled $0.5 million,” the city said. To mitigate the losses, Vaughan received $2.6 million as part of Phase 2 of the federal government's Safe Restart Agreement (SRA) and an additional $4.2 million in provincial COVID-19 funding.

In 2020, the financial impact of COVID-19 in Vaughan included the forgone revenues of $18.3 million. It was mainly due to “closure of recreation facilities, cancellation of recreation programs, lower parking and licensing fees and reduced Municipal Accommodation Tax collections,” the city said.

“There were also incremental COVID-19 related expenses such as personal protection equipment, additional cleaning and overtime of $1.3 million.”

Also, to mitigate losses, the city received $6.2 million as part of Phase 1 of SRA funding from the federal and provincial governments.

Meanwhile, the city told the Vaughan Citizen that as of June 30, Vaughan’s total outstanding debt is $14.3 million. And its debt servicing costs are currently two per cent of its own source revenues, which is within the city’s self-imposed limit.

Dean Ferraro, director of financial services at the city, said Vaughan had a self-imposed limit of 10 per cent of its own source revenues since 2010.

Vaughan council approved a new corporate debt policy in late 2020 and its updated consolidated reserve and reserve fund policy went into effect Oct. 1.

Updating its reserve fund policy has the aim to keep a “reserve balance before commitments should not be in a deficit position,” and only “under very limited circumstances” can a withdrawal or transfer result in a negative balance, excluding commitments and requiring council approval.

However, Almos Tassonyi, an adjunct lecturer in the department of geography and planning at the University of Toronto, dubbed these moves as “good management practice to have,” alluding that they may have had an informal policy in place before that.

Tassonyi, also a research associate at the International Property Tax Institute who has been working with the Municipal Finance Officers Association on creating an analytical framework for municipalities, described Vaughan’s “debt policy is pretty conservative.”

“The conservativeness is that their internal annual debt limit -- 10 per cent of revenues -- is well below the provincial limits which are 25 per cent,” Tassonyi said. “I think this policy reads pretty sensibly.”

As the Dec. 9 deadline for Vaughan approving its 2022 budget looms, the city also said that its property tax supported operations saw 2020 ending with a surplus of $3.1 million.

The surplus is “largely attributed to lower than budgeted labour costs and receipt of federal-provincial COVID emergency assistance funding.”

And to make the ending financial position balanced, it transferred $500,000 to the year-end expenditure reserve and $2.6 million to the tax stabilization reserve.

With property taxes remaining unchanged from the previous year to support residents facing challenges due to COVID-19, Michael Marchetti, director of financial planning and development at the city, explained how “some proportion of our revenues that are tied to user fees -- not property tax -- for recreation programs saw the biggest impact through COVID-19.”

“Recreation programs were unable to run and therefore user fees were lower than previous,” Marchetti added.

And to balance costs in relation to revenues, Marchetti said, “We had to spend less, and there were some associated workforce measures and non-discretionary spending cutbacks.”