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Will Cities be allowed to borrow their way out of COVID Crisis?

Will Cities be allowed to borrow their way out of COVID Crisis?

Mayor Fred Eisenberger issued a news release that called for the federal government to remember Canada’s municipalities when it comes to COVID assistance. The federal government has already spent $145 Billion on a variety of direct assistance programs to laid off Canadian workers and businesses. None of that total includes roughly 500 billions more on various repayable loan schemes and forms of “credit easing.” At her daily news conference today Deputy Prime Minister Chrystia Freeland hinted at a possible solution for municipalities—let them borrow money to cover their shortfalls. Under current municipal legislation in Ontario municipalities are not allowed to run operating deficits. They only long term borrowing that is allowed is for capital requirements and that borrowing is closely monitored. Asked twice about the growing call for assistance by municipalities, Freeland would only say that the government is very aware of the financial position in which municipalities find themselves but added, “we are also aware of their limited ability to borrow money.” She repeated the borrowing reference in answer to a second question. As municipalities are under the control of provincial governments, a relaxation on borrowing would require provincial approval; but in Ontario that approval might not be difficult to obtain. Premier Ford in his briefings, has several times alluded to the fact that Ontario “does not have a printing press to print money.” Indeed, it could be that Freeland’s comments have been prompted by input from premiers. We will see.

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