COVID costs remain unknown as city budget talks approach

Barrie continues to stare down $2M deficit by year’s end, although it could be offset by federal/provincial Safe Restart funding

Barrie’s 2020 pandemic bill should be arriving with the new year.

“Maybe don’t count your chickens, because I think there’s going to be a year-end reckoning and a 2021 bill for COVID we don’t fully know yet,” Mayor Jeff Lehman said Monday night as councillors discussed the city’s financial state.

“By the end of the year we will have a much stronger sense of how much COVID has cost the municipality, what it’s going to cost the municipality and then it will be on us to make those tough decisions around how do we keep those costs off our residents,” Lehman said, “because certainly I would agree that at the household level, we should not be expecting property tax to cover the costs of COVID, notwithstanding the realities of trying to deliver services in that environment.”

The city continues to stare down a $2-million deficit by year’s end, although that could be offset by Safe Restart Agreement funding, federal/provincial money to help municipalities pay for pandemic-related costs.

In its first phase, the city’s allocation was $6.6 million in municipal funding, plus an additional $2.6 million in transit funding, for a total Phase 1 allocation of almost $9.2 million. The province expects the city to place any excess funding, not needed in 2020, into reserves to be accessed to support COVID-19 operating costs and pressures that may occur next year.

Craig Millar, Barrie’s finance director, noted the city is facing a $1-million parking deficit this year and the County of Simcoe is going to require anywhere from $600,000 to $1 million more to cover its additional long-term care costs. 

“As we get towards the end of the year, I anticipate we’ll be closer to breaking even or in a deficit position,” he said. “Things are changing, but as we get towards year-end, you’ll see probably a closer line to what we have forecast around the $2-million deficit mark, before we allocate the Safe Restart funding.”

Coun. Sergio Morales asked about taking any 2020 surplus and applying it against the 2021 property tax increase, which will be determined in the operating and capital budget to be set by city council in late-January.

Lehman said there is some good financial news.

“I was blown away that tax arrears are actually lower than in a non-COVID year,” he said. “All of the forecasting that municipal treasurers rightly did early in COVID assumed that there would be a substantial increase in tax arrears. Tax arrears are down. The percentage of arrears is lower than our forecast.

“So thanks you to all those out there who have made the effort and perhaps it reflects the other economic strength that we’ve ben hearing about from the real estate industry, from the labour market stats, and so on.”

The city will be required to report back to the province in spring 2021 with details of this year’s COVID-19 operating costs and pressures, the city’s overall 2020 financial position and the use of the provincial funding.

Council is also applying for additional funding to address the financial implications of the pandemic through the second phase of Safe Restart — if COVID-19 operating costs and pressures exceed the Phase 1 allocation. 

Millar said the Phase 2 funding is for 2020 and the city should know if it’s eligible in December. It’s difficult to know if the application will be successful, staff say, as the criteria the province will use for evaluating the applications is not known at this time. Information on how the remaining funds are applied will be reported back to council on the final 2020 year-end report. 

In the municipal operating stream, as much as $1.39 billion is available to Ontario municipalities to provide support needed to respond to 2020 COVID-19 impacts and address operating pressures. The municipal operating stream is being allocated in two phases, with half of the funding allocated in Phase 1 for all municipalities and as much as 50 per cent allocated in Phase 2 for municipalities that require additional funding this year.

Barrie councillors received a motion Monday on the financial status of the city at the three-quarters mark of 2020.

Staff say the pandemic continues to impact city operations in the third quarter of 2020, but to a lesser degree since July. Recreation facilities were re-opened with restrictions in place to follow public health guidelines, which limited capacity and use from what would be expected with a full return to normal operations. 

Some facilities usually available for rental remain closed. Enforcement of paid parking resumed with a waterfront restriction to city pass holders and ongoing allowances to assist with curbside pick-up and Dunlop Street construction in the downtown area. Transit fare collection resumed with the installation of protective barriers and using the front doors of buses. 

The significant spending pullback, through intentional cost reductions, continued but to a lesser extent as some services became operational once again. The impact to revenues, offset by the year-to-date reduced spending, has resulted in a $6.3-million surplus as of Sept. 30. 

But staff from various city departments are forecasting negative variances at year-end resulting from reduced revenues and increased costs associated with COVID-19.

Read More

https://cnacertificationprogram.net/covid-costs-remain-unknown-as-city-budget-talks-approach/