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Mayor warns COVID-19 deficit at city hall means 'drastic impacts on services'
LONDON, ONT. -- Reducing services, delaying projects and other belt-tightening proposed by municipal administration could still leave London City Hall facing a multi-million dollar shortfall.
“We are in absolutely dire circumstances,” warns London Mayor Ed Holder. “I don’t want Londoners to think this won’t have drastic impacts on the services we provide.”
A new report for city council members provides an update on the financial impacts caused by COVID-19 pandemic - and a path to partially mitigate the losses.
But ultimately a $7.5-million gap will remain by the end of August.
The financial impacts at City Hall and its agencies is now pegged at $14.3 million to $19.2 million until the end of June or August.
Some of the biggest losses include:
- London Transit ($7.2 million to $10.9 million)
- Investment income ($1.8 million to $3.1 million)
- Casino revenue ($1.7 million to $2.5 million)
A number of belt-tightening measures at City Hall enacted since April will further reduce those losses to $11.1 million to $16 million, if they continue until June 30 or Aug. 31.
City Hall has temporarily laid off 200 full-time staff, 31 students, and delayed the hiring of about 1,300 casual and seasonal workers.
Civic administration outlines a list of additional cost cutting measures that council will consider next week to further mitigate the shortfall.
The proposed cost reductions in 2020 include:
- extending hiring freeze until August 31
- deferral of 17 capital projects (including tree planting, park upgrades, bike/scooter share program) ($3.5 million)
- deferral of some new budget spending (infrastructure gap, waste reduction strategy) ($1.3 million)
Combined with redirecting some tax assessment increases, that would still leave city hall facing an estimated deficit of $4.9 million.
Adding the projected $2.6 million of lost water and wastewater revenue brings the total deficit at the end of August to $7.5 million.
It remains uncertain how council will fill that budget hole.
Holder says a request by the Federation of Canadian Municipalities for support from senior governments is more urgent than ever.
“My intention is not to increase taxes on the citizens of London,” he says. “We do not want to be on the bottom of the priority pile when it comes to senior levels of government.”
Municipalities in Ontario are not allowed to run operating deficits, so the financial hole will have to be filled before next year.
London North Centre MP Peter Fragiskatos sits on the federal finance committee, “To say that London is not being prioritized, that’s just not accurate. there are thousands of Londoners accessing the CERB right now.”
Fragiskatos points to $14 billion recently made available to the provinces for needs including municipal transit.
“I know that the mayor is disappointed that the city has not seen a direct allocation at this point,” says Fragiskatos. “But the provincial government needs to be there.”
City council members will discuss the report at a Strategic Priorities and Policy Committee meeting on June 23.
The next financial update will come in September, when the treasurer projects the estimates to the end of the year.