The Municipality of Chatham-Kent is preparing for the multi-million dollar financial impacts that COVID-19 is projected to have on its operating budget.
Several recommendations in a staff report are up for council approval on Monday night to help close the financial gap caused by the pandemic.
According to the report, based on current projections and assumptions over the next few months, the anticipated net impact of the municipality’s response to the COVID-19 pandemic on the 2020 operating budget is $3.3 million. This consists of $2.4 million of foregone revenue, $3.6 million of additional cost and $2.7 million of anticipated or confirmed COVID-19 funding from senior levels of government for 2020.
"The Municipality of Chatham-Kent is facing unprecedented financial pressures as a result of the COVID-19 response and the economic fallout from the pandemic, including an operating deficit and lower investment returns," the report stated.
Some examples of lost revenue for the municipality include:
- Approved Property Tax and User Fee Deferral - Investment Revenue - Investment in Entegrus - User Fees- Recreation facilities - Recreation programs - Culture and theatre - Library - Transit - Provincial Offences Act - Casino
Chatham-Kent is also facing several additional costs because of the pandemic including the COVID-19 isolation shelter, overtime and wages, public health and land ambulance costs.
As a result, administration is recommending that council approve closing or adjusting the following services for the entire spring/summer season:
-Arenas for ice and non-ice activities -Outdoor pools -Reduced service level of grass cutting for all sports fields and parklands -Reduced service level of grass trimming -Elimination of horticulture flower planting and maintenance -Recreation programming -Summer camp programs -Cancellation of hiring summer students across the organization with the exception of Public Health, Riverview Gardens and Engineering -Cancellation of computer desktop replacement program for 2020 -Capture of travel and conference training savings due to cancellations -Capture of employee benefit savings related to the closure of non-essential service providers -Capture of utility savings of closed facilities and changes to electricity costing
Staff is also recommending approval to discontinue several services until recommended by the Province of Ontario and Medical Officer of Health including:
-Indoor pools -Outdoor soccer fields and baseball facilities -Splash pads, tennis courts, skateboard parks and playground equipment -Marinas and campgrounds -Special events on municipal property -Banner hanging in downtowns -Museums, theatres and cultural facilities -Libraries -John D Bradley Convention Centre (except for temporary shelter) -Recreation halls/meeting room rentals
If the recommendations are approved, it will provide an immediate benefit of approximately $2 million to offset costs. As a result, the current forecast of a $3.3 million operating deficit would then go down to $1.3 million.
Additionally, staff are seeking approval to send a letter to Members of Parliament, Members of Provincial Parliament, the Federation of Canadian Municipalities and to the Association of Municipalities of Ontario for support in expediting federal funding and/or provincial funding directly to municipalities to "address COVID-19 pandemic fiscal pressures and to stimulate economic recovery."
According to the report, municipalities collect approximately nine per cent of overall tax revenue in Canada but deliver 40 per cent of the services that residents rely on.
"With the significant quick uptake of online retail and services, the commercial property tax base has likely been permanently eroded with less bricks and mortar being built in the future. It is time for the federal and provincial governments to evaluate this impact and provide municipalities with the tools to collect some portion of a sales tax, either a portion of HST or some new tax on online sales," reads the report. "Amazon, the world’s largest online sales company value has increased by $24 billion since COVID-19, with many trucks delivering all over Chatham-Kent, but pays no property tax to Chatham-Kent. The constant pounding of our local roads with delivery trucks will take its toll on infrastructure."
Administration is also requesting that any approved infrastructure project funding remain intact due to the fact that Chatham-Kent is not fully funded and costs will rise over time.
"Chatham-Kent contracts out over $50 million of asset and infrastructure-related projects annually," reads the report. "These contracts are relied upon by local businesses. It is recommended that all infrastructure related funding and projects proceed as approved to stimulate the local economy. Some non-essential projects have been delayed until direction from the province allows the work to proceed."
Other recommendations in the report include continuing to redeploy staff when necessary to support Public Heath, Riverview Gardens, the COVID-19 Isolation Shelter. So far, close to one hundred permanent staff have been redeployed as a result of the pandemic.
Lastly, administration is asking council for direction to hold community meetings and return with recommendations on opportunities for permanent service level adjustments to lower future property tax increases.
Under the Municipal Act, municipalities are not able to run deficits. If COVID-19 causes a deficit that cannot be recovered, it would be required to have a one-time special tax levy in 2021 to recover the loss
"Fortunately, Chatham-Kent has healthy reserves and little debt and will be able to fund any deficit not recovered in the year and therefore we do not anticipate running a 2020 deficit," the report states. "Future recommendations to council will indicate funding sources when required."