By Enid Slack and Tomas Hachard
This op-ed originally appeared in the Toronto Star on April 6, 2020.
The spread of COVID-19 across the globe has put cities at the forefront of the response. But, as cities continue to announce new measures to combat the crisis, the financial costs are becoming clear.
This situation presents a great risk for municipalities. Unlike the provincial government, municipalities cannot run an operating deficit. Shortfalls in revenue require them to raise taxes or cut services.
The Ontario government has announced $250 million to help municipalities cover public health and social service costs. It will likely need to go further.
The province should be in conversation with municipalities in Ontario to determine a way forward to cover municipal revenue shortfalls. The province could allow municipalities to run temporary operating deficits, but doing so would require legislation and could have negative long-term consequences. The simpler short-term solution is for the province to cover shortfalls through transfers to municipalities.
At the same time, both provinces and municipalities should be preparing for a longer-term conversation about how to strengthen municipal fiscal health and public services going forward.
Coming out of this crisis would be a good time, for example, for the province and municipalities to work together to clarify responsibilities for public health and social services, which have been at the heart of the response to COVID-19.