Ontario Municipalities Facing Multi-Billion Dollar Shortfall in 2021, With No Emergency Funding in Sight

Ontario’s municipalities are projected to face a combined $2.4 billion shortfall in 2021 due to the ongoing effects of the COVID-19 pandemic, according to a new report by the province’s financial watchdog.

Heavily affected cities may be forced to consider measures such as tax increases or service cuts by 2021 if federal and provincial governments do not provide any additional emergency funding, according to the report of the Ontario Financial Accountability Office (FAO).

The FAO report provides one of the most accurate documents about the catastrophic financial impact of the pandemic on its 444 community areas.

COVID-19 is estimated to cost cities $ 4.1 billion by 2020 and another $ 2.7 billion by 2021, due to massive revenue losses coupled with increased spending.

The FAO report shows that the combination of emergency funding and cost-saving measures that cities take will “completely mitigate” the major losses of 2020.

Municipalities received $3 billion in emergency support this year via the Safe Restart Agreement, a joint federal-provincial program.

They also saved a total of $ 1.1 billion through measures such as temporary workforce cuts, public transit cuts and the closure of facilities and community programs.

While the financial outlook is expected to improve next year, the ability for municipalities to handle future losses is uncertain, since there is relatively little emergency funding earmarked for 2021.

What has been announced – $300 million for shipping-related losses and $ 700 million to cover other losses – is not expected to be enough compared to the billions of dollars shortages of zones community sector.

Accountability Officer Peter Weltman said a concrete plan to replenish funding is increasingly needed, as most community areas are currently in the process of defining their 2021 budget. They are not allowed to run deficits according to provincial law.

Toronto Mayor John Tory for several months urged the federal and provincial governments to endorse an additional emergency funding package, which he called the “Safe Restart 2.0” program.

Tory also released on Thursday an open letter to Prime Minister Justin Trudeau and Prime Minister Doug Ford, in which he once again called for more funding.

Toronto forecasts a shortage of 1.5 billion by 2021, after significant cuts are implemented.

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