Tax increases and service cuts likely if municipalities don't get extra cash soon, mayors say

If municipalities do not receive emergency COVID-19 funding from the provincial and federal governments, it will mean cuts to services, staff layoffs and increased property taxes.

That's the message Ontario's municipalities sent Monday morning in support of a call made in April by the Federation of Canadian Municipalities for at least $10 billion in emergency cash for municipalities across the country.

In June, the federal government said it would fast-track $2.2 billion in funding to the municipalities. That money is from the gas tax fund. Normally the municipalities receive two installments of funding, but this year the September payment was lumped in with the June payment.

As well, the federal government promised $14 billion to the provinces and territories to help them "safely and carefully" reopen their economies, but that funding is also earmarked for more personal protective equipment for front-line health care workers and businesses, and for child care so that parents can go back to work. 

While that funding is appreciated, it's unclear exactly how much municipalities will get, and whether there's any flexibility in how that money is spent by local governments, says Guelph Mayor Cam Guthrie.

Guthrie, who is also chair of the Large Urban Mayors' Caucus of Ontario, said on Monday that municipalities are midway through their budget years and will start thinking about the 2021 budget. He said while he has talked to provincial and federal politicians about the emergency cash, and talk has been positive, "nothing has materialized."

"The back and forth and the staring contest that seems to be happening, is not materializing in any type of financial emergency operating funds that we need and it is not giving us the certainty that we need," he said.

The federal government has promised funding, but exactly how much and when municipalities will receive the money remains unclear, he said.

He said he's talked to other municipal leaders who have said they've either started already making cuts, or plan to very soon.

"Our message today is that time is running out and frankly, time is up," Guthrie said. "Every day that this funding does not come down, it is another moment we're closer to actually laying off more people."

Cuts to services, staff layoffs possible

Toronto Mayor John Tory said a city staff report is expected in July that will look for ways for the city to save money. That could include reducing or cancelling some services including those for children and seniors, transit, postponing infrastructure projects and staff layoffs.

He said he's had discussions with both governments repeatedly, but there doesn't seem to be an agreement between the province and federal government about how to flow the money to municipalities and whether the money needs to be earmarked for certain things.

Municipalities are not allowed to budget for a deficit, and Tory said allowing them to do so for 2021 wouldn't help local governments. Instead, allowing a deficit just postpones the problem, he said.

"We need that help and we need it now," he said.

Municipalities have been working "flat out" to meet the needs of residents, said Region of Waterloo Chair Karen Redman, who is also chair of Mayors and Regional Chairs of Ontario.

"We kept essential services running when our residents needed it most," Redman said. "This has left a huge deficit in our budgets."

Tory has called for federal and provincial leaders to provide details about funding to municipalities this week. Redman says it should happen as soon as possible to avoid cuts and job losses.

"Funding must reach the municipalities quickly and directly," she said.

Feds say premiers need to agree to plan

Ontario Minister of Municipal Affairs and Housing Steve Clark said in a statement that the province moved to provide $350 million to municipalities through the Social Services Relief Fund to help them offset costs from COVID-19.

"Given the national scale and magnitude of the shortfalls facing Canadian municipalities, it is imperative that the federal government step up and join us in developing a plan to help our municipalities recover from the impacts of COVID-19," Clark said.

"We will continue to be a champion for our communities. We know the need is urgent. And we will continue to work with the federal government and push for a joint funding program."

The federal government, however, says it is waiting for the premiers.

"We very much look forward to concluding this agreement with them to ensure a safe economic restart for all Canadians," Katherine Cuplinskas, press secretary for Deputy Prime Minister Chrystia Freeland, said in an email.

"The prime minister and deputy prime minister continue to express to the premiers the federal government's eagerness to hear from the provinces and territories on ways we can help," the statement said. "We are grateful for the leadership that all municipalities, very much including those in Ontario, continue to demonstrate at this immensely challenging time."