Burning through the savings: City looks to cut costs as coronavirus takes toll on finances

Between unexpected costs and lost revenues associated with COVID-19, the City of Edmonton is at risk of burning through its savings if it doesn't act swiftly to cut spending, warns Mayor Don Iveson.

The crisis has seen increases in staff overtime and other costs, while new public health measures have forced the closure of revenue-producing recreation centres, Iveson said in an interview Tuesday with CBC Radio's Edmonton AM

On top of that, the city has introduced measures intended to ease the financial burden on citizens, including waived transit fares, free parking and an option to defer paying property taxes and utilities.

The result has created an "extraordinary year for our budget" — and a real fear of running out of money, he said.

'Extraordinary costs'

"When you delay the collection of up to $1.5 billion in property taxes, plus several months of utility fees through the summer, you can actually burn through your cash reserves and start bouncing cheques," Iveson said.

"Obviously we want to avoid that." 

The city has "hundreds of millions in the bank" that it can tap, he said, but council is urgently looking for ways to save money.

The financial and corporate services branch is expected to present a supplementary budget adjustment to council on April 15. 

"There's the matter of our extraordinary costs this year and the matter of making sure we can make payroll, essentially," Iveson said.

John Shypitka/CBC News

City staffing has already been significantly reduced, with about 2,100 city and Edmonton Public Library employees being temporarily laid off, effective April 14. These include about 1,600 employees who work in recreation centres, arenas, leisure centres, libraries and other public spaces.

On Tuesday, Iveson warned another wave of layoffs is possible, depending on how long the pandemic lasts.

"We have to contain costs as much as we can on the front end," he said. "We've had to make some very difficult decisions ... and there will be more difficult decisions to come for council before this is all done."

Avoid permanent layoffs

The city is working with unions to avoid permanent layoffs but the final decision will depend on what services may need to be suspended and how long the coronavirus crisis lasts, he said.

Without further cuts in service and "significant" financial assistance from other levels of government, municipalities across the country will be struggling, Iveson said. 

"There's quite a bit of work being done to determine — across municipalities of all sizes in this country — what those challenges will be and to seek assistance from provincial and federal governments to make sure that we don't start bouncing cheques, which will start happening in the fall for many municipalities without substantial assistance."