The federal and provincial governments must roll out a powerful rescue plan for cities: the $10 billion emergency fund proposed by the Federation of Canadian Municipalities would be a good start.
There is no financial or social recovery from COVID-19 without cities.
Cities are trying to help residents and small businesses by deferring tax deadlines, creating emergency grant programs and investing in stimulus projects. Still, the ten largest cities in Canada face combined operating budget shortfalls in excess of $3 billion and growing. Property taxes would have to rise by as much as 50 per cent to cover that gap. It makes no sense to hit our residents with massive tax increases when so many are fighting for survival. What’s equally destructive is to close the gap by laying off city staff and slashing services — that directly harms public health, and undermines the national economic recovery.
The federal government has committed an estimated $146 billion to emergency support during the pandemic. One critical sector of Canada’s economy has been bypassed: cities. Canadian cities represent more than 80 per cent of our nation’s population, but only receive eight cents of every tax dollar. COVID-19 relief funds are no exception to this rule.
Municipalities are ground zero for the COVID-19 recession. Our communities experience first-hand the catastrophe of closed businesses, evicted renters, mass unemployment and idled workplaces.
Additionally, some communities have been disproportionately impacted by the epidemic, including urban Indigenous communities, racialized communities, people experiencing homelessness and low-income residents. And it is municipalities that will ensure that the recovery from the pandemic addresses the needs of systemically vulnerable communities.
Seventy per cent of Canada’s GDP is created in metropolitan areas, and cities provide nearly all social programs. From job training programs to affordable housing, Canadian cities will execute the bulk of our recovery strategies.
Municipalities also face unique and unfortunate fiscal challenges from this pandemic. Cities are not legally permitted to run operating deficits, and costs incurred due to public health measures have ballooned for emergency shelters and cleaning measures. To make matters worse, municipal revenues are falling through the floor. Residential and business property taxes, user fees, transit fares and others have all been hammered.
"The federal government has committed an estimated $146 billion to emergency support during the pandemic. One critical sector of Canada’s economy has been bypassed: cities."
Right now, the options for cities are mostly limited to slashing services or drastically raising taxes. Neither is the right answer. Public health and our commitment to building safe and high-quality communities require us to maintain essential services.
We, as Canadian municipal leaders, will do everything we can in the coming desperate months to preserve the critical front-line services essential to defeating the coronavirus and preserving healthy communities. We cannot succeed without strong, fast help from higher levels of government. The rules need to change. Now.
The federal and provincial governments must roll out a powerful rescue plan for cities: the $10 billion emergency fund proposed by the Federation of Canadian Municipalities would be a good start. Flexible, regionally supported approaches to recovery should be prioritized. Access to the Canada Emergency Wage Subsidy program is imperative. And the Bank of Canada, already buying federal, provincial and corporate bonds at near-zero interest rates, should offer the same for local governments.
Provinces also need to relax the restrictions on cities by waiving balanced-budget requirements and providing their own emergency aid for municipalities. Requiring any government to balance its books during an economic downturn and health crisis is old-fashioned, ideological and self-destructive. It’s a discredited and counter-productive policy, and still rules fiscal affairs for Canada’s municipalities.
Canada’s cities are a vital link in stopping contagion and returning our communities to health. Yet our capacity to do the job is becoming more difficult every day. If cities cancel essential services and eliminate thousands of jobs, the risk of renewed waves of infection will be predictably elevated — and the current recession will turn into a depression. Let’s move quickly to give cities the fiscal tools they need to help defeat this pandemic.
Cities are the economic engines of this country. If cities fail, Canada fails.