City officials optimistic provincial budget will cover COVID-19 costs

The provincial budget appears to be offering Ottawa "a good start" at covering the city's projected $153-million deficit this year, says Mayor Jim Watson.

The 2021 budget tabled Wednesday at Queen's Park provides $905 million for municipalities and their services: $500 million to shore up operational costs; another $150 million for revenue-ravaged transit systems; and $255 million for social services.

• Here's what you need to know about Ontario's 2021 budget
• Ontario budget 2021: Deep deficits as province plots COVID-19 recovery

All this spending was pre-announced by the government earlier this month, but is welcomed nonetheless by the city, which is currently forecasting a $153-million deficit if the pandemic continues through to the end of the year.

Ottawa's share of the new provincial funds comes to about $70 million, but the federal government is expected to match that amount in its own budget next month.

"A good portion of it actually is for costs that we've incurred for everything from PPE to paramedic overtime costs to running the vaccination centres at city facilities," the mayor told CBC Ottawa's All In a Day host Alan Neal on Wednesday. "It's not going to go to new programs. It's going to basically cover the costs that we've incurred as a direct result of COVID-19."

City ended with surplus last year

In fact, COVID-19 had a net impact of $238.5 million on the city last year, according to a staff report that was made public Wednesday evening.

The hardest hit department was transit by a wide margin. OC Transpo, which saw its ridership plummet as workplaces and schools closed, lost $108 million of revenue in 2020.

But the city's shortfall was more-than-covered by federal and provincial funding, and Ottawa actually ended the year with a surplus of almost $22 million, says the report that is going council's finance and economic development committee next month.

Even better, it appears that the city carried over $103 million of unused provincial and federal funding from last year into 2021, although $79.4 million has to be used by March 31, 2021. And unspent money will have to be sent back.

'Very optimistic' on public health

Like Watson, Ottawa Board of Health Chair Keith Egli wants to hear about the budget details before breathing a sigh of relief — but so far, so good, he said.

"We're very optimistic," Egli told CBC. "We made it very clear to the province that there were going to be unforeseen expenses related to the vaccine rollout. They've indicated go ahead — get as many people vaccinated as quickly as you can."

Ottawa Public Health (OPH) saw its costs increase by $19 million last year — a figure that will likely soar in 2021 as staff roll out the massive vaccination plan. The province put aside $1 billion in its 2021 budget for the vaccine program, and another $2.3 billion to pay for COVID-19 testing and contact tracing in 2021 and 2022, an indication that the government doesn't think we'll be quite done with coronavirus this year.

It's too early to say whether those funds will be enough, said Egli. Circumstances change rapidly, including this week when the province's online appointment system double-booked residents for shots. The city had to pivot, finding shuttles to take those who were overbooked to a different vaccination centre.

"Nobody really knows what's going to cost at the end of the day," he said." There's a certain level of working on faith here."

Egli said OPH needs "to forge ahead and do the work and and sort it out when the dust clears," adding that the province has given "every indication that they're going to be there for us and make us whole."

Money for hospitality, not for housing

Watson said he was relieved to see help for small businesses extended, and a new $100-million program for hard-hit tourism and hospitality businesses, which will be eligible for one-time payments between $10,000 and $20,000.

Tourism is Ottawa's third-largest industry and the mayor hopes that the province will spend some of its economic recovery money on marketing. He expects "a much more focused campaign on domestic tourism," targeting Toronto, Kingston, Montreal when it's appropriate to travel.

Watson was disappointed, however, to see little new money for affordable housing. Ottawa's city council declared a housing emergency in Ottawa last year, and earlier this month approved its first-ever long-term financial plan to deal with housing and homelessness. That plan calls for the provincial and federal governments to equally split a $585-million price tag for new housing over the next decade.

Ontario's 2021 budget didn't address the housing issue in any significant way.

Internet for smaller municipalities

The budget contained a few shout-outs for smaller municipalities, too. In particular, the government pledged to spend $2.8 billion to bring broadband to more people over the next four years. 

And the province will temporarily increase the Regional Opportunities Investment Tax Credit for businesses outside large centres like Toronto and Ottawa, a move that will cost the government $61 million.

As well, the Ontario Municipal Partnership Fund — which helps smaller centres with their operating costs — remains stable at about $500 million.