City revenue could suffer for years

It could take years for the city’s revenue from parking fees, Transit fares and hotel taxes to return to normal after being walloped by the pandemic.

Coun. Scott Gillingham, chairman of city council’s finance committee, said the revenue drop was expected, after Winnipeggers were repeatedly told to stay home to avoid spreading the virus.

The city’s 2021 budget has lowered revenue expectations in many departments to reflect its losses.

However, he expects it could take years for normal activities, and the city revenues they generate, to fully rebound.

"It’s going to take quite a while, several months, maybe even years, to recover Transit fares, parking revenues and accommodation taxes, as well," he said.

In 2020, Winnipeg Transit fare revenue topped out at just $49.3 million, falling from $90.5 million in 2019, the City of Winnipeg’s preliminary year-end figures show.

Money earned from parking fines dropped by about half, to $4.6 million last year from $8.9 million in 2019, and parking fee revenue dropped to just under $9 million from $15.2 million.

"I’ve never seen anything… that’s like this, that’s impacted us so significantly in a single year," said Grant Heather, the Winnipeg Parking Authority’s vehicles for hire manager.

Heather said Winnipeg parking revenues and fines are normally "very stable" and the authority has dampened its revenue expectations to avoid a shortfall for this year, as pandemic restrictions continue.

In addition to Winnipeggers staying home during lockdowns last year, Heather said the revenues also fell due to a pandemic relief measure. The city has offered one hour of free parking at all metered locations since March 2020 to support businesses that rely on paid stalls, a practice set to continue until June 30.

Gillingham notes Winnipeg Transit’s loss is directly linked to plummeting ridership, which is currently about 60 per cent lower than pre-pandemic levels.

While the 2021 budget included a six per cent cut to transit service, the councillor said there are no plans to raise bus fares or hourly parking rates to offset pandemic revenue losses.

"You don’t grow a city on the backs of Transit fares and parking fees," he said.

Revenue from the accommodation tax, which is collected on motel and hotel stays, fell to $4.1 million in 2020 from $10 million in 2019, as Canadians were repeatedly told to avoid non-essential travel.

Those figures reflect massive losses in an industry that depends on revenues from travel, large events and restaurants, all of which have been severely limited by the pandemic, said Scott Jocelyn, president and chief executive officer of the Manitoba Hotel Association.

"I think the accommodation tax is a great indicator of exactly where we’re at," said Jocelyn.

"Though there isn’t a lock on the door that says do not enter, we’re open, but because people can’t travel, people can’t congregate (it’s like) we’re not open," he added.

Jocelyn said COVID-19 restrictions have meant some large downtown hotels have single-digit occupancy at times, while they continue to pay property taxes based on their 2018 revenue level. The association is lobbying for sector-specific government relief, including some form of property tax break.

In 2020, building permits and fees raised $33.3 million, down from $37.4 million in 2019.

Gillingham said it’s critical for the city to grow its tax base to help offset its own future revenue losses. He believes that effort should include extending water and sewer service to prepare more land for development.

"We need people to develop in Winnipeg… and people (to buy homes) where the jobs are," he said.

Gillingham said he expects the decision to re-establish an economic development office at the city level will help pave the way for growth.

 

joyanne.pursaga@freepress.mb.ca

Twitter: @joyanne_pursaga