Municipalities say financial relief urgently needed or safe restart efforts could be derailed
“Canadian municipalities financially hurt by the COVID-19 pandemic are again pushing the federal government to provide them emergency funds, with one mayor saying it is “time to deliver” or else efforts to restart local economies could be jeopardized.
The Liberal government has yet to offer municipalities a financial relief package, two months after the Federation of Canadian Municipalities (FCM) formally asked for one in order to cover an estimated $10 to $15 billion in non-recoverable operating losses incurred from the pandemic.
The FCM, which advocates on behalf of Canada’s municipalities, said Friday it also wants Ottawa to specify how much of the $14 billion it is pledging for provinces and territories as part of a “safe restart” plan will go towards municipal needs. An agreement with the provinces has yet to be struck on the plan.
As part of four “bottom-line” requirements for an economic restart, the FCM also wants the federal government to ensure frontline municipal services, such as fire, ambulance and public transit, are protected.
The organization also wants quick and direct funding through using existing mechanisms such as the Gas Tax Fund and the public transit stream of the federal infrastructure plan.
Ultimately, municipal governments want help to address both the operational budget shortfall from the COVID-19 pandemic and the cost of a gradual restart.
Municipal governments are prevented by law from running annual deficits, meaning they will have no choice but to cut services or raise taxes in order to balance the books. Cities, towns and communities have seen revenues plummet due to COVID-19, as transit and user fees and property taxes go uncollected.
READ MORE: Municipalities, facing a financial crisis, ask Ottawa for $10B in emergency funds
Asked Friday why it has taken so long for the federal government to respond to cities’ pleas for help, Edmonton Mayor Don Iveson said he believes municipalities were caught in the “traditional Canadian constitutional square dance” between Ottawa and the provinces over whose responsibility it is to come to the rescue of local governments.
Iveson, the chair of the FCM’s big cities’ caucus, said Ottawa has said the provinces need to offer support. In turn, municipal leaders have reached out to premiers, municipal affairs and finance ministers in an effort to get them to reach a deal with the federal government. However, some provinces were in unsustainable financial positions even before the pandemic.
READ MORE: Trudeau government wants provinces to chip in to support municipalities
“It is time to deliver because the uncertainty is creating tremendous challenges in our communities about what we can safely turn back on,” he said.
Iveson said while Alberta has allowed Edmonton to reopen recreational centres, the city lacks the financial confidence to do so with usage of services so uncertain. Similarly, he said there are challenges with increasing or decreasing transit service.
“There’s a lot of cost and friction to turning these services back on and off,” he said. “If all of that’s on the back of property taxpayers and municipal employees being laid off and put back on…it’s tremendously disruptive to our organizations.”
The Liberal government has so far fast-tracked a $2.2-billion annual transfer of Gas Tax Fund money for municipalities, although none of it will go toward covering their operating costs. The money under the fund is used for local infrastructure needs.
Meanwhile, premiers have said the $14 billion for provinces and territories, which will help municipalities pay for public transit and infrastructure, is not enough.
Trudeau said Friday that negotiations on the safe restart package are still ongoing. He spoke to premiers yesterday in a weekly teleconference.
Iveson said there are concerns that there will be “very little left” for municipalities out of that $14 billion, as provincial governments need the money to cover their losses as well.”