Barrie Mayor Jeff Lehman has praise for the way the Ontario government has rolled out the first phase of the $4 billion earmarked to help municipalities hard-hit by the pandemic. But he also has many unanswered questions as to whether what’s on the table will be enough to cover off the financial impact of COVID-19.
The government announced last week that it will provide $1.6 billion as part of the first round of emergency funding under the Safe Restart Agreement negotiated with the federal government.
Barrie will receive a little over $9.1 million, with $6.6 million for municipal operations and $2.5 million for transit.
Lehman said the government did the right thing by allocating dollars based on the number of households in the City when it came to municipal funding and on ridership when it came to the transit piece. He said that helped get the money out the door more quickly.
“We don’t know yet whether that will cover all of our costs. I suspect it will not on the transit side,” said Lehman. “It may on the municipal side. It really depends on what happens in the fall, if we get a second wave, if we are incurring additional costs, and our revenues, of course, would drop again if there is a second wave, and we had to close up our facilities or limit our transit service.”
The mayor said the first phase is an excellent start and he understands this money will actually come to the City in September.
Asked whether property taxpayers should be nervous if the City needs to find additional revenue to make up for any shortfall, Lehman said that’s not the route anyone wants to take.
“With economic conditions as they are, this is the last time in the world you would want to have a large tax increase. We would be doing everything we can to avoid that now.”
Lehman is hesitant to predict what it might look like if the City is still in a deficit position, but he did not shy away from the possibility of service cuts.
“We do have some service levels right now that are lower than usual. Transit service is on the hour. Some of our facilities are closed. That does save the City some money. What we would do is try to offset the costs rather than having to go to the taxpayer for a significant increase.”
By law, Ontario municipalities are not allowed to run operating deficits.
“I think it is all too early to know though whether the funding will be enough to balance off our shortfall or whether or not we have to look at sustaining any cuts into 2020-21 to compensate” said Lehman.
The mayor does see a ray of sunshine, believing the fiscal situation has improved as the COVID situation has improved.
“Our economy here in Barrie is doing extremely well. We’re still in a tough situation due to COVID, but we saw some really great job numbers relative to some other cities just last month.”
Stats Canada reported Barrie had the highest employment rate in the country at 66.5 per cent, which means a larger percentage of the population in the City was working in July than any other urban area in Canada.
At the time, Lehman noted that the unemployment rate in Barrie dropped a full per cent to 9.7 per cent, when most cities were in the 11-13 per cent range.
A really critical component as to whether Barrie will be able to fiscally withstand the pandemic’s onslaught is the ability of residents and businesses to pay their property taxes.
“What we hope that translates into is we won’t see substantial defaults on property tax,” said Lehman. “That’s where the fire and brimstone happens for municipalities. 70 per cent roughly of our revenue comes from one place and that’s people’s annual property taxes. And that’s not just residential. That’s all the commercial plazas, all the industries and everything in the City. If we saw a lot of business bankruptcies and a lot of defaults on property taxes on commercial and industrial, in addition to your average resident struggling to pay their bill, then we would be in a tougher situation.”
There has been a slight increase in people struggling to pay their taxes, but not as much has had been anticipated.
“I am knocking on wood as we say that because that also means both people and businesses might be in a little better shape than was feared.”
The mayor admits that could be a bit artificial. He acknowledges many businesses and people’s finances have been supported by things like CERB (Canada Emergency Response Benefit) and the wage subsidy, and those things are going to end.
He expects it will be Christmas before there is a full picture of both the economic impact and the fiscal impact on the City.
“I think one of the other giant question marks for us surrounds the capital budget. That’s where we often have more room to move in terms of our choice as to what big projects get built and what don’t. You can’t let a bridge fall down. You can’t let a road that’s impassable continue to be impassable or pipes to break. Every year we do a certain amount of capital work that is necessary as a minimum level of maintenance.”
Lehman said the City has been trying to do more of that and trying to catch up on the condition of roads and build things like the Harvie-Big Bay Point bridge. He said the degree to which Barrie will be able to do those projects in 2021 is very dependent on the City’s fiscal situation.
“That’s why we don’t want to make any assumptions around that. We really want to see what plays out over the course of the next three to four months and then make decisions on it.”
Lehman said the money from all levels of government has been a long time coming, reminding residents that for months Ontario mayors were trying to beat the drum together around the fact municipalities were one of the few sectors that didn’t see any support.