Editorial: More civic math problems for Canadians

Here’s one business fundamental that COVID-19 has not affected: math. For a lot of Canadian small businesses, math’s bottom-line numbers following a year in the pandemic economy are painful and depressing. For a lot of residents, attempting to unravel the math of their municipality’s finances is similarly painful and depressing.

In the case of small businesses, the math in many ways has been out of their control as COVID-19 cut the cash flow that’s critical to their survival. Many are not going to survive. The Canadian Federation of Independent Business recently estimated that one in six small businesses in Canada are on the brink of shutting down permanently. That’s close to 200,000 businesses and 2.4 million jobs at risk. Their disappearance will have significant consequences for the second part of this math equation: municipal government budgets. Here the issue is more than math realities created by circumstances beyond the control of small businesses. It falls under the heading of public sector communication clarity and resource management accountability. Too many municipalities are failing their residents on both counts, according to a C.D. Howe Institute report on municipal government fiscal accountability. The report grades the clarity, timeliness and comprehensiveness of 31 major Canadian municipalities based on their most recent budgets and financial statements. The news for the most part is not good. In summary, we have inconsistent accounting procedures resulting in budgets that understate the size of city operations, “omit key activities, exaggerate the costs of investments, hide the cost of pension obligations and obscure the sustainability of their fiscal positions over time.” Add to this widespread budget presentation opacity and you have more than a basic math problem with how cities make key spending decisions. That math in a pandemic economy, which is draining the small-business lifeblood out of communities, is simple: residents and businesses cannot afford municipal accounting’s status quo.