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Vaughan mayor asks Ottawa, Ontario for $45M for COVID-19 recovery

'Vaughan is in a better fiscal position than many municipalities today'
June 24, 2020
Dina Al-Shibeeb

Buoyed by having “one of the highest” average household incomes, Vaughan Mayor Maurizio Bevilacqua has no intentions to spur any increase in municipal taxes to speed up the recovery phase for the City post-COVID-19.

In a phone interview with Bevilacqua, the mayor explained how a $45 million injection from both the provincial and federal governments would help the City’s economy, and that’s not “asking for a favour.”

“We live in an area where the average household income is in excess of $100,000, (making) it one of the highest in the country,” he added.

With Vaughan being a “net importer of jobs,” the City also has the lion’s share of York Region’s manufacturing jobs -- in 2019 there were 48,100 jobs in this sector, or 58 per cent of the 82,500 manufacturing jobs regionwide.

“So, there's no question about the fact that we have done our share for the federal and provincial government, and for the Region,” he said. These two governments “need to understand that the city of Vaughan is one of those cities that’s truly the engine, one of the most important engines of the Canadian economy in the Region.”

Almos Tassonyi, executive fellow, school of public policy for the University of Calgary, dubbed Vaughan as “in a better fiscal position than many municipalities today,” adding that there are other municipalities including those in York Region that might not be doing as good as Vaughan.

This could be the reason why the provincial and the federal governments might not yield to the mayor’s demand.

In his financial update report, Michael Coroneos, deputy city manager, corporate services and chief financial officer, meanwhile, has recommended that Vaughan to “continue” its efforts alongside other municipalities to seek “financial support from senior levels of government to help offset the financial impact of the COVID-19 pandemic.”

Coroneos made the recommendation despite the City's cash position is "healthy" due to unrestricted operating cash balance of $200 million as of April 30 and low outstanding debt and debt service ratio as a percentage of own source revenues -- $23 million and 2.3 per cent respectively, as of Dec. 31, 2019.

However, Coroneos gave two scenarios in his report: First, if COVID-19 conditions and restorations persist until Sep. 30, followed by six-month recovery period ending March 31, 2021, with a total estimated financial impact of $19.4 million in 2020 and $4.9 million in 2021 consisting of a myriad of tax support foregone revenue and additional costs.

The second scenario is if these restrictions persist until Dec. 31, followed by 12-month recovery period ending Dec., 2021, there will be a total estimated financial impact of $21.1 million in 2020 and $18.6 million in 2021.

Tassonyi -- also a research associate at the International Property Tax Institute and Adjunct Lecturer at the University of Toronto's Department of Geography and Planning -- described Vaughan’s estimate of a $20 million shortfall a year as "relatively small amount" compared to other municipalities.

"That shortfall is about five per cent of their operating budget. In comparison to Toronto, which is now estimating a 15 per cent shortfall based on the impact of COVID-19 on the transit system, the property tax base and other revenues,” Tassonyi said.

However, it’s the uncertainty that’s driving both Bevilacqua and Coroneos to ask for some additional help.

“At this point, what's not known is how many people will try to defer their property taxes this year, and then make it up next year, depending on their fiscal situation,” he said.

“There are potential long-run consequences that we don't really know yet,” he added.

With COVID-19 affecting businesses, Tassonyi said, “It depends on how well the non-residential taxation is particularly involved in the commercial tax pay hold-up, so that's a really widespread point.”

“We don't know right now what will happen to small and large businesses, and how many of them will survive. I mean, many of those are tenants. So, that’s really a long-run question that's being taken up by a number of municipalities and academics.”

Tassonyi, however, believes the province should “loosen” rules for municipalities by allowing them to make up for the COVID-19-related deficits in the following years.

For Bevilacqua, there needs to be “investment” into a local community because “that’s where economic activity takes place” and into a city such as Vaughan that “can actually bring about the economic recovery.”

“What I'm asking them is for them to be wise,” the mayor added, describing Vaughan having a “great track record” of “19,000 businesses over 230,000 jobs, and economic growth of over 3 per cent, outpacing the province and the country.”

“We had an economic employment growth prior to COVID-19 of 5.6 per cent, which is one of the highest in North America.”