City has saved hundreds of millions but still faces $1.35 billion shortfall due to COVID-19: report
TORONTO -- The City of Toronto has saved hundreds of millions of dollars through a series of cuts but still faces a shortfall of $1.35 billion and may have to implement a series of “grim strategies” to balance its budget as early as later this summer, Mayor John Tory says.
The city had at one point said that it could face a shortfall of between $1.5 billion and $2.7 billion due to lost revenue and increased costs resulting from the pandemic but a staff report released on Tuesday paints a slightly rosier, though still incredibly alarming picture of its fiscal situation.
The 76-page report, which will be considered by the city’s executive committee next week, says that the financial pressures faced by the city by the end of 2020 will total $1.9 billion. The report, however, says that the city has already saved $188 million through various “mitigation strategies” and expects that number to increase to nearly $514 million by the end of the year, reducing the likely shortfall to $1.35 billion.
Some of the mitigation measures undertaken so far have included the placing of 1,008 full time staff on unpaid leave and 475 part time staff on unpaid leave. The city also saved millions by electing not to hire more than 8,000 recreation workers whose services were not required due to pandemic-related programming reductions, according to the report.
“When confronted with this financial disaster, we did not simply put our hand out to Ottawa and Queen’s Park and say ‘Please fix this for us’ but rather we all worked together to so far find $514 million in savings on our own so that the problem we are seeking help with would be minimized to the maximum extent we could,” Tory said during a press conference at city hall on Tuesday morning. “I don’t want to get in to speculating about what will happen if we don’t get that help (with the remaining shortfall) but it will be a choice of only two things. One is service cuts and the other is tax increases because we don’t have other options to turn to.”
TTC faces $700 million shortfall
The report says that the TTC alone will face a nearly $700 million shortfall in its budget by the end of 2020, largely as a result of ridership losses that peaked at 86 per cent during the height of the pandemic and are expected to hover around 70 per cent this fall.
The report says that the city’s “non program revenues” will also be down by $481 million by year-end, mostly as a result of a significant reduction in real estate listings that has been impacting the revenue from the Municipal Land Transfer Tax to the tune of about $9.3 million a week.
Meanwhile, the report warns that the shortfall in the budget for Shelter, Support and Housing Administration could hit $185 million by year-end as a result of additional costs related to maintaining physical distancing in the shelter system.
There are also dozens of smaller budgetary impacts, each totalling in the millions of dollars.
The report says that the Toronto Parking Authority budget will face a shortfall of $96.4 million, mostly due to a partial suspension of enforcement for some parking offences during the pandemic. It also says that the city’s IT budget will face an $11.4 million shortfall as a result of expenses related to enabling city staff to telework during the pandemic.