Mayor John Tory says Toronto could face a budget shortfall of nearly $2.8 billion as a result of COVID-19's lasting impact on the city.
Tory announced the news Friday afternoon during his daily briefing, calling the coronavirus outbreak “one of the greatest financial challenges the city has ever faced.”
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During his briefing, Tory said the City continues to lose $65 million a week, $20 million of which comes from lost revenue from the TTC, while other funds are lost through closures, decreased service demands, and property tax and utility payment deferrals.
Tory said the City's finance staff has crunched these numbers and determined that a three-month lockdown and six-month recovery period, during which time neither revenue nor expenses are expected to return back to normal, could cost the city $1.5 billion.
According to the City, $938 million is estimated for the direct impacts relating to the lockdown and $590 million for a six-month recovery period, once restrictions are eased. "This pressure may be driven higher if there is a significant real-estate market impact, the physical distancing measures are extended beyond 12 weeks or there continues to be additional waves of COVID-19 throughout the remainder of the year."
"That is the best-case scenario," said Tory.
And while Tory hopes the length of the lockdown and recovery periods are as short as possible, the City has to go on the assumption that they may last longer.
Tory described a second scenario, which includes a nine-month lockdown and a 12-month recovery period, that could end up costing the City $2.76-billion by the end of this year. Tory added that the costs could carry over into 2021, as the recovery period could last into the new year.
Mayor Tory said that staff continue to scour the City’s expenses for any kind of savings and that talks are ongoing with higher levels of government on possible financial support.
Either of Tory's scenarios will eat up a considerable amount of the City's approved operational budget for 2020, which is $13.53-billion.
According to reports, the City had initially projected the shortfall to be somewhere closer to $780-million. However, this projection factored in much shorter lockdown and recovery periods that would last through the end of June.
