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Current state of economy unclear after COVID-19

By Chris Jones/The Oshawa Express

Oshawa city staff believe it’s too early to determine the state of the local economy as COVID-19 slows.

Speaking with The Oshawa Express, Oshawa’s Commissioner of Finance and Treasurer Stephanie Sinnott said while city hall has worked to keep residents safe and employed, it’s still too early to see what’s in store for the economy.

“Right now, we don’t know what’s going to happen over the next few months. That’s really going to start to paint a picture,” says Sinnott. “Until there are more decisions done about reopening, it’s really a lot of crystal ball gazing.”

She explains another unknown is how the federal government and provincial governments will respond to the economic fallout of COVID-19.

“We don’t know if the federal and provincial governments are going to step up to the plate and offer some financing plans for municipalities,” she says.

The feds and the province have already implemented some funding relief for municipalities, according to Sinnott, but she isn’t sure what else is coming.

She adds the City of Oshawa, being a lower-tier government, doesn’t provide the services for which the relief is intended and therefore didn’t benefit from some of the funding offers.

“When they offer money for frontline workers and things of that nature, it’s mostly focused on the healthcare sector, and from a municipal perspective, most of the money would go to the region, and not to the city directly,” she explains.

If either government steps up and says they will help fund the deficits brought about by the pandemic, Sinnott says that will have a significant impact on Oshawa and how city hall will approach the economic recovery.

“I do anticipate that if the senior levels of government do offer some kind of financial assistance to municipalities that they will expect municipalities to step up to the plate and pay a portion of it,” she explains.

If this were to be the case, Sinnott says city hall would look to its reserve funds, such as the tax rate stabilization reserve, and others that might have uncommitted balances.

“We would take a very measured approach in terms of using those reserves so that we can still maintain a long-term financially stable reserve program into the 10 year planning horizon that we normally operate under,” she says.

Simply put, Sinnott says it’s difficult to tell at the moment how much damage has been done by the pandemic. She explains the city has developed scenarios in terms of a future forecast based on a number of models, which take into account multiple assumptions about the future of the economy.

There is also an assumption from in the projections that there will be a phased-in approach to the reopening of the local economy.

Sinnott notes if there is a second wave of COVID-19 in the fall, the city would continue it’s approach of containing costs.

“We’ve worked under the assumption that our cost containment initiatives that we’ve put in place will be in effect for the remainder the year,” she explains.

While Sinnott acknowledges she doesn’t know what the future holds, she expects the economy would be completely locked down again.

“The province has been clear in talking about the reopening, and if the numbers continue to increase, the premier would be prepared to take a step back and detract some of the things that they’ve already given permission to open,” she says.