OTTAWA—Toronto Mayor John Tory is backing calls on the federal government to provide at least $10 billion in emergency funding to municipalities facing a cash crunch that could imperil local services.
The health and economic fallout of the pandemic has seen municipal revenues such as parking and transit fares drop sharply while expenses such as boosting local health services and supporting vulnerable populations have risen, leaving municipalities in a financial hole estimated at $10 billion to $15 billion nationwide.
Toronto is looking at a shortfall of up to $1.5 billion this year, the most serious financial challenge to face the city, Tory said Thursday.
“To me it’s a serious financial problem and requires a very serious solution,” he said in an interview.
The Federation of Canadian Municipalities on Thursday asked the federal government for $7.6 billion to cover operating losses suffered by towns and cities, a further $2.4 billion for losses related to transit operations with the possibility of further demands in the future, depending how the pandemic plays out.
“I’m strongly supportive of it and believe it is absolutely the right thing to do,” Tory said of the request for federal funding.
He said federal and provincial investments in Toronto and other cities will ensure stable municipal finances and services and smooth the economic recovery, which in turn will pump more tax revenue into the coffers of the higher governments.
“The dividends will be paid financially to those other governments. They will get their money back. For them to step forward and backstop not just Toronto but all the cities in the country — where 80 per cent of Canadians live — is the best investment that these governments could make,” he said.
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Municipal leaders have held discussions with Deputy Prime Minister Chrystia Freeland and Catherine McKenna, the minister of infrastructure and communities.
Freeland said Thursday that Ottawa is aware of the “urgency” of what confronts cities, providing essential services while seeing revenues fall “precipitously.”
The appeal came on the same day that the Toronto Transit Commission announced it was laying off 1,200 workers. The pandemic has meant an 85 per cent drop in ridership and a monthly loss in revenue of $90 million, the TTC said.
“It is really essential that the cities remain up and running for our economy eventually to get back up and running,” said Freeland, who represents the Toronto riding of University-Rosedale.
Though sympathetic to their plight, neither Freeland nor Prime Minister Justin Trudeau made any firm commitments to municipalities Thursday that aid was on the way.
“We will continue to work with the provinces but we’ll also continue to work directly with municipalities to make sure that Canadians get the services they need,” Trudeau said.
Not getting federal or provincial help will lead to “austerity, further layoffs and eventually service level cuts or tax increases,” said Edmonton Mayor Don Iveson, FCM’s big city mayors’ caucus.
“We need immediate aid in order to support continuity of our businesses, to forestall further layoffs and ensure continuity of essential services,” Iveson said during a conference call.
With costs rising and “staggering” drops in revenue local leaders face “stark choices,” said Bill Karsten, FCM president and a councillor with the Halifax Regional Municipality.
“To be blunt, cutting back front-line services now would put Canadians at even greater risk.”
Vancouver Mayor Kennedy Stewart has already sounded the alarm. With concerns that 25 per cent of property owners may not pay their municipal tax bills, there are fears the city’s shortfall could mount to more than $500 million. That would push the city to the brink of insolvency, forced to “liquify assets and exhaust every reserve fund we have,” he said on April 12.
The financial crisis is aggravated by the fact that municipalities are not permitted to run deficits and only have limited means to raise revenue, primarily through property taxes and user fees. That restricted revenue base has long been a source of complaint for local leaders.
That financial straitjacket is why one proposed solution to the current crisis — letting municipalities run deficits — is not favoured by municipal leaders.
“We don’t have revenues that will rise with the economic recovery after this with which to replenish the hole dug by those deficits,” Iveson said.
Iveson said federal funding could be channelled quickly using existing funding mechanisms, such as the gas tax infrastructure fund. “It’s a conduit that could be activated immediately,” he said. Under that formula, Toronto could get $575 million for operating funds and another $575 million to support transit funds, FCM said.
Bruce Campion-Smith is an Ottawa-based reporter covering national politics. Follow him on Twitter: @yowflier
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