The City of Vancouver has temporarily laid off 1,500 employees in the past three weeks and could lose up to $200 million in revenue, if the pandemic persists until the end of the year.
That is the dire financial situation the city finds itself in as it has had to temporarily shut libraries, civic theatres, community centres and other facilities to help prevent the spread of COVID-19.
City manager Sadhu Johnston said those closures combined with the city suspending enforcement of parking meters – which provide millions of dollars in revenue – triggered the layoffs.
“We couldn’t keep paying everybody that was working at those locations,” Johnston said by telephone Friday. “As much as we can, we’ve been redeploying people, but revenues are gone. It’s pretty major reductions for us at this point.”
Employees affected by the layoffs, which Johnston described as temporary, are a mix of full-time, part-time, casual and auxiliary. It’s too early to say, he added, when any or all could return to work.
Mayor Kennedy Stewart said Friday he didn’t anticipate such a drastic cut would be necessary in his time in office, noting the economy was in good shape prior to the outbreak reaching B.C. in January.
“Our hearts totally go out to them,” he said of city employees now out of work.
Stewart said layoffs and cuts are being felt in municipalities across the country. The mayor said he spoke with mayors Thursday from other large Canadian cities about their financial situations.
“Cities across the country are facing unprecedented financial pressures, some already talking about insolvency – only three weeks into this crisis,” Stewart said Friday at a city hall news conference. “So we absolutely need the province and the federal government to step up and help us with operations.”
Relief measures include a request for the provincial government to apply the residential property tax deferment program to businesses and non-profits.
It’s the same measure the region’s mayors have requested of senior governments, knowing that such a move could affect each cities’ revenues, with roughly 80 per cent of local government operating budgets funded from property tax and utility fees.
“That also would have a financial hit for us, but could be important for the community,” said Johnston, noting the city is also proposing deferring property tax payments normally due in July for two months. “Everything’s on the table at this point.”
That includes finding ways to cover a potential $200 million revenue loss this year. The city has cash reserves, contingency funds and a property endowment fund – all mentioned to Johnston when asked by Glacier Media whether they will be used to pay bills and keep city services operating.
“The first thing we’ve got to do is reduce our expenditures, which is what the reduction is staffing is about,” the city manager said. “But we need to be looking across the entire organization to determine what the next steps are.”
Added Johnston: “If push comes to shove, we would have to go into reserves, but that’s not enough to sustain us, and we don’t have $200 million sitting aside that we could use for that.”
Meanwhile, the city is still processing building permits and has worked with construction companies to allow projects to continue, including extending hours of operation to keep the industry from collapsing.
“When we come out of this whole thing, ideally people will be able to get going again and we don’t want our development and permit process to be a barrier to that,” said Johnston, noting staff are reviewing permits from their home offices. “So we’re doing as much as we can to keep that going.”
It was only four months ago that city council approved a $1.6 billion operating budget that included a seven per cent property tax hike this year for Vancouver residents.
In February, the mayor urged council to set a target on the property tax rate for 2021 at no more than five per cent. The city’s current financial crisis suggests that rate is now irrelevant, with the velocity of the pandemic dictating the future state of the economy.