UBCM has been monitoring and assessing the impact of COVID-19 on BC communities and local government operations and finances. Last week, UBCM reached out to a wide of range of local governments to gather information the immediate and projected long-term financial pressures facing local governments, their residents, and local businesses. As part of this outreach, UBCM sought to identify measures that could address the financial pressures local governments faced, as well as support the economic recovery following the pandemic.
“Local governments find themselves in a double-bind,” said Mayor Maja Tait, UBCM president. “The sudden and dramatic loss of revenue is requiring us to rethink budgets to focus on core service delivery and support the provincially coordinated response to COVID-19. At the same time, we are aware of the many residents and businesses in our communities that have seen even greater losses of income and are looking for relief.”
Local governments identified a significant number of financial challenges and pressures including:
- The loss of variable revenue including facility, transit, recreation, development, parking, hotel tax, airport and gaming revenue;
- The potential need to re-evaluate capital spending, including shelving discretionary projects or diverting funds from capital projects to operations;
- The decline in investment income from invested funds, and from any internal borrowing required to sustain operations;
- Additional costs incurred by local governments in supporting vulnerable populations, implementing provincial orders, and operating Emergency Operation Centers;
- Growing public and business community pressure to re-evaluate proposed or recently passed property tax increases;
- Increasing pressure to enact tax relief measures for residents and businesses including waiving utility penalties, deferring utility payment deadlines, and/or deferring property tax deadlines;
- Potential inability to meet looming financial deadlines including financial statements, annual reports, and SOFI reports;
- Anticipated delay in the completion of capital projects, with the concern that federal and provincial funding will be taken away if deadlines are not met;
- Assessing whether they should and/or could use accumulated surplus reserves and other restricted reserve funds to meet operational needs;
- The potential need to access Municipal Finance Authority borrowing for shortfalls in revenue.
- As required by legislation, local governments do not have the ability to run deficits.
UBCM has engaged in discussions with the Province on these immediate and longer-term challenges for local governments and their communities. Areas of discussion for potential relief measures have focused on property taxes, legislated financial timelines, restrictions on reserves, capital project timelines, grants, and infrastructure stimulus funding.
“While we are in a provincial emergency, it’s more important than ever to work closely with other orders of government to strengthen our communities,” said Tait. “The Province is aware of the pressures that bear upon local governments and the need to ensure sustainable service delivery at this critical time.”
UBCM will continue to monitor and assess the impact of COVID-19 on members and their communities. Local governments that wish to provide additional information to UBCM may do by contacting Jared Wright, Director of Advocacy and Government Relations.