OTTAWA -- The COVID-19 pandemic could blow a major hole in the City's finances, with a precipitous loss of transit revenue the driving factor.

In a report to City Council Wednesday, Treasurer Wendy Stephanson said staff looked at three pandemic scenarios to estimate how they would affect the City's bottom line. The projections are based on the pandemic and its associated effects continuing for three months, six months, or nine months, respectively.

"This is an unprecedented situation and one that the City has never seen or been in before," Stephanson said.

The City has already cancelled event registrations and extended closures to June 30, which is the end of the three-month projection.

In that time, Stephanson projects a $102-million shortfall for the City.

The loss of transit fare revenue is, by far, the biggest factor in the shortfall, accounting for 52 per cent of the budgetary pressure on the City.

"This projection is the worst-case scenario and we have assumed there will be no fares collected starting in April," Stephanson said.

If the pandemic were to last to the end of the year, the projections suggest the City could lose more than $272-million, with transit fare losses accounting for $156-million.

"Even if we assume the current low-level of ridership, approximately 10 to 15 per cent of shortfall, just for transit, the revenue shortfall is approximately $130-million for the year," Stephanson said.

Assuming recreational facilities remain closed during the pandemic, the revenues generated from them is the next biggest loss, accounting for more than $20-million in losses by the end of June and $54-million by the end of December.

The projection also assumes a 50 per cent reduction in parking ticket revenues for the year, a reduction in water rates from commercial and institutional sectors, and lower returns from investments.

Stephanson said municipalities across Ontario and across Canada are experiencing similar struggles because of the pandemic.

Some savings to operating costs

Stephanson says a full assessment is underway to determine the pandemic's cost impacts and savings, but preliminary estimates show savings in transit overtime and fuel costs, compensation to recreational facility staff, lower utility bills due to facilities being closed, and a reduction in the subsidies for Equipass and ODSP bus passes.

The estimate suggests a savings of $5.8-million. 

The costs are projected to increase, however, for long-term care staff, more residential garbage processing, a need for more hardware and software to enable City staff to work from home, and increased payments to emergency and protective services such as police and paramedics.

Stephanson stressed this is not a complete picture and work is continuing to determine the impacts and savings to the City as a result of COVID-19's effect on the economy.

City cash flow "unsustainable" without help 

 Stephanson says the City has sufficient cash flow to make to the end of the year, should the pandemic continue, but there are significant gaps, and help from other levels of government is needed.

"The City has sufficient cash flow to the end of the year but it's not sustainable without additional support and reductions in our spending," Stephanson said. "The most significant impact is City revenues, and finance staff are working with departments to close that gap by decreasing expenses and pausing or stopping work wherever possible."

Stephanson says the City will need some help from the federal and provincial governments to bridge the gap.

Some funding from the other levels is coming. Stephanson says the federal government is giving the City $1.65-million for 2019-2020 and $4.8-million in 2020-2021 toward aiding the housing and homelessness sectors.

The Province of Ontario has also announced support for municipalities, but Stephanson says the exact figures for Ottawa haven't been announced. She did say, however, that the City will be receiving $300,000 from the Province to prevent and contain the spread of COVID-19 in the city's long-term care homes.

The Province has also deferred June and September education tax payments and has postponed the planned property tax assessment for 2021.

Stephanson says the City is in a good cash position and has strong credit ratings from agencies Standard & Poors and Moody's.

"At the end of 2019, our cash and investments had totaled $1.6-billion," Stephanson said. "As of March 31, the total had remained $1.6-billion. We typically maintain between $400- and $600-million in cash and one billion in long-term investments."

Should the pandemic continue, however, Stephanson projects a major loss to the City's cash reserves and investments. Staff suggest the City could lose approximately $400-million in cash and investments by the end of September. In a worst-case scenario, the City could lose a billion dollars in cash and investments by the end of the year.

Capital reserves are projected to decline should the pandemic last to the end of June, September, or December, but most are forecasted to remain positive. Transit reserves, however, drop into significant deficit positions in all scenarios.