Standing Committee on Finance and Economic Affairs
COVID Relief Act
July 14, 2020
3:00pm – 4:00pm
Good afternoon Mr. Chair and Members of the Committee
Thank you for inviting me to join you today
I am joined by our CAO, Paul Mitcham and our Director of Finance, Jeff Jackson.
Let me begin by thanking the Ontario government for working with municipalities through this crisis and for the measures you have taken to date.
We have made use of the tools you have provided, including allowing electronic meetings that have permitted our Council to continue to meet virtually 15 times.
I also want to thank the government for their advocacy across Canada and with the federal government to secure funding for municipalities.
We need emergency assistance now.
As you have no doubt heard from municipalities across the province, the financial situation in our communities is dire.
Our budgets are not designed to manage a pandemic and our revenue tools do not allow us to address the mounting financial losses from this crisis.
Like all levels of government, Mississauga has taken action to provide relief to our residents and businesses:
- We closed our facilities;
- Operated free transit to protect the driver and riders;
- Deferred over $700m in property and other taxes to assist with short term liquidity pressures in the community; and
- Deferred rents at City-owned facilities.
These are just a few of the many actions we have taken.
But our actions have a cost.
The impact of the pandemic on the City of Mississauga in 2020 is estimated to be $107m.
We have worked to offset these losses, including laying-off 2,000 temporary staff and instituting a hiring freeze, as well as cutting all discretionary spending.
These measures and others have helped us find $47 million in savings.
We are doing our part.
But the bottom line remains that we are facing unrecoverable losses in 2020 of over $60 million.
This excludes the losses at the Region of Peel, which also impact the Mississauga tax bill.
Over the next 3 years, our total gross losses are expected to be $140m.
For context, to make up this deficit would be equivalent to shutting down transit for 8 months, or our libraries for 2 years, or the entire City for 1.5 months.
These are not feasible options and would stifle economic recovery.
But without federal and provincial emergency assistance, we are seriously looking at the deep cuts we will have to make.
In Canada, the Federation of Canadian Municipalities has calculated that the losses across the municipal sector are $12 billion.
As you know, cities derive the majority of their funding from the property tax and user fees, and to a lesser extent, government grants and transfers.
We are still expected to operate essential services like housing, transit, fire and emergency services, police, public health, and much more.
When we have no revenue to do so, we enter deficit.
At the end of the day there is only one taxpayer. If cities don’t receive operating relief, it will not only impact our services levels but our people, many of whom are struggling to make ends meet.
If Mississauga’s losses were to be covered by the property tax alone, it would represent a 12% increase.
Either we raise taxes significantly, or cut the services people need. We’re on the horns of an impossible dilemma.
Both the provincial and federal governments have the fiscal firepower to provide financial relief. We need you to do so.
Cities are the economic engines of this country. Mississauga generates $60 billion in GDP alone, every year. We’re home to over 450,000 jobs and 94,000 businesses.
We drive the economy, the income tax, the sales tax, and many other provincial and federal government revenues.
The investments we make in providing services and building infrastructure, allow our economy to run smoothly.
If we do not receive emergency funding soon, we will likely be forced to delay or cancel capital projects and use that funding to offset our operating losses.
A strong recovery cannot happen without strong cities.
Before I get into our recommendations, I would be remiss if I didn’t mention a uniquely Mississauga issue: the Greater Toronto Airports Authority (GTAA) Payment in Lieu of Taxes (PILTs).
The country’s largest airport and our largest landowner pays us PILTs every year, based on a per passenger count, but not on cargo.
This formula has not changed since 2001.
Revenues are paid with a 2 year lag, meaning the effects of 2020 will not be felt until 2022.
Passenger decreases are not capped, but increases are, at 5%. So, we will feel the pain of 2020 with the GTAA, but when passenger volumes increase by more than 5% in the coming years, the maximum the City will receive is 5%.
We are projecting a conservative 60% loss of passengers in 2020. Based on the 2 year lag, this will mean another $18 million loss in 2022 and $17 million loss in 2023 for the City.
We anticipate a $182 million loss over the next two decades if changes are not made. It could be higher.
Combined with other projected losses, this pandemic will not be just a one year shock but will have echo effects for years to come.
As we have for decades, we are asking for the PILT formula to be amended to include cargo and to remove the 5% cap.
Only the Provincial government can change this, not the City and not the GTAA.
In closing, Mississauga’s recommendations are as follows:
- Provide immediate emergency funding to offset non-recoverable municipal losses as a result of COVID-19 on an equitable basis.
- Approve ICIP projects and get infrastructure money flowing as soon as possible.
- Increase the amount of gas tax funding made available to municipalities to offset transit losses.
- Review legislation and regulations, and eliminate administrative requirements to ensure municipalities are not unduly burdened
- Convene discussions with municipalities to discuss new revenue tools for cities to deal with our new realities, as well address the fiscal imbalance in the federal framework.
- Develop long-term, predictable and permanent infrastructure funding formulas for municipalities so we can address our mounting capital deficits and get infrastructure built.
We want to be your partners in recovery from COVID-19 and build Ontario. But we cannot do so by dramatically increasing property taxes or slashing services or delaying capital projects.
We need support from the federal and provincial governments.
Thank you for allowing me to address you today.
I am happy to take any questions you may have.