CALGARY -- City of Calgary staff say the state of emergency and shutdown measures in place due to the COVID-19 pandemic will lead to a big hole in the 2020 budget.
"The financial gap is big," said city manager David Duckworth. "We were having problems pre-COVID. It’s now much worse."
City council received a lengthy update on the city’s financials Thursday morning.
The presentation showed city revenue fell by $21.5 million between March 12 - April 19, mostly due to the closure of recreation facilities and loss of transit revenue. Costs for overtime, IT equipment and extra facility cleaning exceeded $10 million over that period as well.
The cost estimates do not include the Calgary Police Service or other civic partners and community associations.
City administration says 668,000 bookings and visits to recreation facilities have been lost since the pandemic started. CTrain ridership has plummeted by 90 per cent and major Calgary Transit bus routes, including MAX routes, are down 80 per cent .
Demand for the Calgary Emergency Management Agency and law and supply management department have significantly increased.
The city has laid off around 1,200 employees and instituted a hiring freeze.
City staff presented three scenarios for potential budget gaps based on the duration of the pandemic.
If the pandemic continues until June 30 of this year, the city will face an estimated $145 million budget shortfall. That gap could balloon to $235 million if the coronavirus shutdown stretches to Dec. 31, 2020.
"We can’t close the financial gap with service cuts alone," Duckworth said.
"What we’re talking about now are temporary changes,," said Carla Male, the City of Calgary’s CFO. "We are not redoing the budget."
Instead, administration will try to make up the shortfall through a multi-faceted approach. Tactics include service reductions, identifying efficiencies, dipping into city reserves and capital spending changes.
If the city implements temporary service changes — which could include cutting transit routes and capital and operating reductions in several city departments — the budget gap could be narrowed. However, a $26 million budget shortfall would still exist if the pandemic continues until the end of the year.
Another budget update is expected on May 11.
