City revenues plummet during COVID-19 crisis

City revenues plummet during COVID-19 crisis

As the city of Ottawa careens toward the apex of the COVID-19 crisis, officials have been authorized to spend money on measures to help keep residents as safe and healthy as possible. 

But that spending comes just as city revenues are plummeting.

"The concern for us right now, in terms of the areas we're focusing on, are our community and vulnerable population. And we're putting a lot of effort into that," city manager Steve Kanellakos told reporters after Wednesday's virtual council meeting.

"It's hard to look really far out because the repercussions seem so complex," Kanellakos said. "And there's so many variables that will impact that."

Mayor Jim Watson declared a state of emergency Wednesday to give the city's senior staff more authority to purchase goods and services to help people during the pandemic. 

That means everything from setting up isolation centres for the homeless to paying front-line workers overtime and buying protective gear for city staff. As supply channels constrict, the city may find itself purchasing food for shelters and homeless families living in motels, or even putting emergency workers up in hotels if they can't go home because they have a sick family member.

But just as the city is ramping up spending to deal with the crisis, many of its revenue sources — for instance, OC Transpo —  are collapsing.

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Ridership plunging, recreation fees reduced

Ridership on OC Transpo has fallen by as much as 90 per cent, and it's hard to see many riders renewing their monthly passes this spring —  a problem, as transit fares bring about $50 million per quarter into the city's coffers.

With all indoor recreation facilities and outdoor sports fields closed until early summer at least, the city has also had to forego current and future fees for programs and rentals. The city expected to take in more than $51 million in fees for 2020 — it's now looking at losing at least a quarter of that.

Council just passed a measure to let most property owners facing COVID-19 hardships to defer their property taxes until October, which could also cause a cash crunch.

At the same time, many of the city's spending initiatives, such as garbage pickup, water service and road repair, aren't very discretionary.

"Our expenditures are pretty well planned ... yet our revenues are declining at a rapid pace," Kannelakos said. "And we need to understand what that gap is, and how do we mitigate that."

'Deep dive' into expenses

It's still fairly early in the COVID-19 crisis, making it hard to understand the full financial scope of the pandemic on the city's books, and that's not where the major focus is right now anyway.

But treasurer Wendy Stephanson told reporters the city is closely examining its expenses "to see what we can stop, what we can put off and [how it affects] our cash flow over any year."

"We've done a deep dive analysis of that, to make sure that we have enough to get us through to the end of the year. And we'll continue that work as we move forward," she said.

Municipal officials said they'd be looking at cutting any spending that isn't imminently needed, something departments have been asked to do before. They'll also not renew expiring contracts or fill positions that are empty. 

They didn't speak directly to part-time workers, but it's hard not to see some of them having their hours reduced or eliminated altogether.

At the same time, said Kanellakos, the city has to make sure it has enough employees providing the city's essential services — especially as he expects absenteeism among the workforce to increase as staff deal with illness, child-care issues and other stresses.

Working with others

The city will also look outside its own borders for help.

The Canadian Urban Transit Association, of which OC Transpo is a member, has already told the federal government transit systems need help with escalating cleaning costs, as fare revenue sinks. It's not hard to imagine that a request to upper levels of government for operating assistance is far behind.

And because the dilemma of rising costs in the face of falling revenues isn't unique to Ottawa, the city has banded together with Toronto, Vancouver and Calgary to ask consultants Ernst & Young to help them with a plan for economic recovery.

"We find that these four cities probably have the most in common, and we're looking to bring Montreal and a few others," said Kanellakos.