Skip to content

City's deficit due to COVID won't be nearly as bad as envisioned, say officials

There's a feeling of relief at city hall, however there are still some unknowns around the financial figures, says deputy-mayor

Barrie’s financial hole from the pandemic is likely much shallower than originally forecast.

City staff are projecting a $2-million deficit by year’s end, provided project expenditures are under-budget by 0.8 per cent and revenues remain below budget by 1.5 per cent.

And these numbers don’t take into account the city’s share of the Safe Restart Agreement (SRA), federal money to restart economies and make communities more resilient to surges in COVID-19 cases.

“I would say yes, it’s better than we thought was going to happen six months ago,” Craig Millar, the city’s finance director, said of the deficit projection.

But Deputy Mayor Barry Ward, who sits on the city finance and corporate services committee, noted there are still many unknowns about the pandemic, and how it could affect city finances.

“We don’t know what will be happening with COVID-19 through the rest of the year,” he said. “Will a resurgence of the pandemic bring more lockdowns and restrictions, further hurting revenue and prompting the city to look at additional easing of tax and utility bill deadlines?

“Or will life get back to some kind of normal, easing the financial pressure on the city," Ward added. "The second factor is not knowing how much funding we’ll get from the federal government and province in the second phase of relief funding.”

Last month, the first round of SRA funding was announced. Barrie will receive $6.6 million in municipal funding and an additional $2.6 million for transit, for a total of almost $9.2 million. The funding’s purpose is to address priority 2020 COVID-19 operating costs and pressures.

Any excess funding is to be put into a reserve to support COVID-19 operating costs and pressures that might occur in 2021.

“Do I expect it will put us in a positive (financial position) at the end of the year? Perhaps, but I don’t think so,” Millar said. “We’ll use the money. If there is money left over, we’re required to hold it to 2021 to deal with COVID then. But I anticipated it will all be used.”

The pandemic significantly impacted city operations during the first half of 2020, with substantial revenue losses in recreation fees, rental revenue and permits caused by the lockdown and closed facilities, such as community centres.

The city also provided free transit and offered free parking, which further cut revenues. Interest and penalty charges in 2020 were also waived until June 30, and a fixed-rate credit program for water and sewer services was put in place for those in need.

To help offset this revenue loss, the city cut its spending right across the corporation, by limiting services and closing facilities, such as the Barrie Public Library branches.

Last April, the city projected $65 million in lost revenue by year’s end due to the pandemic; the municipality’s 2020 operating budget is $343 million. At the same time, the city announced hundreds of employees were being laid off — following the closure of some facilities — as well as 470 part-time staff.

Ward says he thinks CAO Michael Prowse and city staff have done a great job of minimizing losses to date through cutting services and reducing staff.

“It was unfortunate for those (city staff) affected, but necessary during the unprecedented time,” Ward said.

Millar said the $65-million lost-revenue forecast was based on 20 per cent of property taxpayers not paying one time, but that didn’t happen. 

“So if we look at that today, there was a payment as of Aug. 31, our taxes receivables is about 7.5 per cent outstanding — so comparable to the normal year-end average of six per cent, that’s very positive,” he said. “People are paying their taxes is what’s happening, which is good.”

He said there’s another tax payment due at the end of October, but he expects the trend will continue and that people will pay.

The SRA is a federal investment of more than $19 billion to help provinces and territories safely restart their economies and make the country more resilient to surges in COVID-19 cases.

But during the first days of the pandemic, it wasn’t money the city could count on.

“Early on when things happened, there was no indication that revenues were coming from the province or the federal government,” Millar said.

Now that money will help the city get closer to breaking even by year’s end.

Millar noted that municipal governments can’t plan to run an annual deficit, but it can happen. Normally, stabilization reserve funds would be used to make up the difference.

Barrie’s 2020 deficit forecast is part of a staff report for a motion councillors will consider at Monday night’s meeting on the status of the city’s business plan — its operating budget, which sets property taxes and service levels, and its capital budget, which builds city projects, such as road construction.


Reader Feedback

Bob Bruton

About the Author: Bob Bruton

Bob Bruton is a full-time BarrieToday reporter who covers politics and city hall.
Read more