OTTAWA -- The COVID-19 pandemic is creating a multi-million dollar budget deficit at Ottawa City Hall, and staff warn the impacts of the pandemic will create issues with the 2021 budget.
City Treasurer Wendy Stephanson presented City Council will three scenarios for a budget deficit this year due to the COVID-19 measures and the shutdown of city services.
- $18 million deficit if the measures remain in place until the end of June.
- $35.8 million deficit if the measures remain in place until September
- $49.8 million deficit if the measures remain in place until the end of the year.
The budget deficits do not include the budgets for Ottawa Public Health, the Ottawa Police Service and the Ottawa Public Library.
Stephanson told Council the City of Ottawa is losing an estimated $1 million a day in revenue due to the COVID-19 pandemic. Stephanson says the $30 million in lost revenue a month has been offset by $11 million in savings a month.
“However, we do have additional costs of approximately $5 million a month, so that gives us a net burn rate of $24 million a month as we move through the pandemic.”
Stephanson says most of the deficit is due to a loss of revenue at OC Transpo and Parks, Recreation and Facilities Services.
The loss of revenue includes parking tickets and parking revenue. Under the projections, the City of Ottawa expects to lose $5.1 million in parking ticket and other Bylaw Services revenue by the end of June, and $9.4 million if the pandemic measures remain in place until September.
Revenue for on and off-street parking is expected to drop by $4.3 million if the pandemic measures remain in place until the end of June, and $11.8 million if pandemic measures are in place until the end of the year.
The projected deficits have been offset thanks to savings due to the closure of recreation centres and savings in parks, roads and forestry contracts and staff.
Stephanson told Council the city is working to secure “backstop funding and one-time grants” from other levels of government to address the budget shortfall. The city is also looking at whether they can defer capital projects.
City staff will present financial strategies to Council at a later date with suggestions to address the deficit.
Stephanson told Council that the budget deficits are preliminary and could change.
City Manager Steve Kanellakos says the City of Ottawa is planning for the pandemic restrictions to remain in place until September, but the COVID-19 pandemic will impact Ottawa’s finances into 2021.
“Council will have to make some decisions with the Mayor’s leadership in terms of what is our fiscal framework going to be, our long-range plan going to be,” said Kanellakos, noting Council will need to look at property tax hikes and user fees in 2021.
“We’re looking at this as a problem through the next 18 months that we’re going to have to manage as an organization to make sure we balance our revenues and expenditures.”
OC Transpo
OC Transpo has seen revenues plummet during the COVID-19 pandemic.
Stephanson told Council that OC Transpo is facing a $45 million deficit if the pandemic measures remain in place until the end of June, a $83.8 million deficit if the measures remain in place until the end of September, and a $131.7 million deficit if the measures remain in place until the end of the year.
“The most significant impact is the reduction in fare revenue, which is estimated to be $98.4 million if the pandemic continues until September,” Stephanson said.
OC Transpo will see a $51.9 million drop in revenue if the pandemic measures continue until the end of June.
Budget deficits
Medical Officer of Health Dr. Vera Etches told the Board of Health on Monday that Ottawa Public Health is running a $750,000 a month deficit during the pandemic. The deficit is due to staff overtime and the hiring of 350 new employees to help during the COVID-19 pandemic.
The Ottawa Police Service is forecasting a deficit of $1.4 million to $5.9 million this year, depending on how long the pandemic measures remain in place.