'Not going to be pretty': More details coming on COVID-19 hit to city finances

A city staff report coming next week is expected to lay bare the impact COVID-19 is having on London's finances as the city deals with significant revenue reductions. 

While budget chair Coun. Josh Morgan says London entered the crisis on solid financial ground, he says the report will leave council to face some tough choices. 

"It's going to say 'Here's where we stand,'" said Morgan. "And my anticipation of what I know so far is it's not going to be pretty." 

The coronavirus outbreak came just weeks after city council wrapped up a difficult series of debates to hammer out its four-year budget. 

Some of the assumptions built into that budget will now go out the window, with all but a few local businesses ordered closed as part of measures to contain the spread of a virus that has infected almost two million people worldwide. 

Key revenue sources for the city, such as property taxes (64 per cent of city revenue) and grants from senior governments (22 per cent), will continue, but other income sources have dried up. 

Most user fees, for example, aren't being collected because most city facilities and programs aren't operating. The shutdown of construction has limited the collection of development charges and permit fees. London Public Library can't gather fines and public transit boarding since the outbreak is 20 per cent the normal rate with reduced service. Added together, those revenue reductions will leave the city facing some kind of budget hole to fill. The only question is how big, and how to fill it.

Morgan doesn't want to speculate until seeing the report, which he said will provide the "first real look" into the city's new budget reality in a post-COVID world. While he doesn't have details, he's clearly bracing for some difficult news.

"As it's trending with other municipalities, it's not going to be positive," he said. 

Revenues down

The city has already taken some steps to save money. Last week, about 800 casual workers were placed on unpaid emergency leave and the start dates of about 300 seasonal staff were deferred. 

While the city is saving some money during the shutdown — by using less fuel for fleet vehicles, for example — it isn't enough to make up for a difficult financial reality.

"The decrease in our costs is not going to offset the decreases in our revenue," said Morgan. "We'll be in a difficult position and we'll need to make some tough decisions moving forward." 

Morgan said cities, London included, will be lobbying senior governments for help. Morgan is seeking re-election to the board of the Federation of Canadian Municipalities, putting him in a good spot to press his case on behalf of London and other cities facing the same challenge. 

"We're going to have those important discussions about how we can be supported so that we can do all the things that are expected of us," said Morgan. He pointed out that municipalities aren't allowed to run operational deficits, which constrains their ability to raise money outside of regular revenue sources. 

Meanwhile, the city is dealing with more demands on certain services and requests from taxpayers for help.

In a move to offer some relief, council's corporate services committee voted yesterday to again push back the payment deadline for property tax instalments. 

Whether property owners were paying monthly or five times a year, the next instalment isn't due until the end of August. All final instalments for 2020 are due Dec. 15. 

A staff report warned that moving payment deadlines past the end of the calendar year would cause the city cash-flow problems. 

The report outlining London's new financial reality is expected to be on the agenda of the strategic priorities and policy committee's April 28 meeting.