TORONTO -- The city will face an opening pressure of $1.5 billion as it plans its budget for 2021 and will need to evaluate the services it delivers and how it delivers them amid “financial pressures that were unimaginable in previous years,” a new report from City Manager Chris Murray suggests.
In the 37-page report, which will go before Mayor John Tory’s executive committee next week, Murray says that the pandemic has “exacerbated the city’s structural financial challenges,” especially when it comes to services like the TTC which he said is “more heavily reliant on fare revenue compared to other major transit systems.”
He said that right now staff are pegging the total year-end financial impact from the pandemic at more than $1.8 billion, though he said that number has been reduced to $673.2 million as a result of city mitigation strategies totalling $542.8 million and hundreds of millions of dollars in “much needed” federal and provincial support as part of the Safe Restart Agreement.
Murray, however, is warning that there could be more “difficult decisions” to come as staff work to fill this year’s shortfall and then begin preparing next year’s budget amid $1.5 billion in “financial pressures caused by COVID-19 that will exist into at least 2021.”
“The City has already made difficult decisions about costs, services, service levels, capital projects, and placing staff on emergency leave, among others,” he said. “We need to evaluate which services we deliver and how we deliver them. We will need to look for options for outsourcing, alternative service delivery, delaying or cancelling the return of paused services, or delivering services in new ways such as online or through amended service agreements.”
In his report, Murray said that the COVID-19 pandemic has “has created financial pressures that were unimaginable in previous years,” including a revenue loss of $916.3 million through the end of August with nearly half of that ($453.2 million) being attributed to an 80 per cent decline in ridership on the TTC.
He said that the city is “optimistic” that further federal and provincial funding is “forthcoming” but he warned that there is “uncertainty” about the extent to which it will offset the remaining budget pressure for 2020.
Murray also said that if the city does not receive a commitment of further funding by the end of 2020, it will be “forced to consider impacts such as reductions to transit service, service levels and programs” as part of its 2021 budget.
“Given this context, we know we cannot do it all,” he says.
‘Substantial risk’ to city’s long-term financial sustainability
Murray’s report says that decision makers need to view “COVID-19 as more of a marathon than a sprint, and one we cannot travel alone.”
For that reason, he is recommending the formation of a “strategic federal-provincial-municipal intergovernmental table on recovery and renewal.”
He also says that there must also be a recognition going forward that the city’s “current mix of revenue tools does not adequately support the city’s service responsibilities.”
“This situation has created substantial risk to the city’s long-term financial sustainability,” he warns.
More to come…
