Montreal blames dip in real-estate sales, inflation, climate-related spending for budget crunch

The City of Montreal is facing a major economic crunch that it says it couldn't predict, as it finds itself $80 million short for next year.

With a month before the city tables its budget, the Valérie Plante administration said Wednesday it is imposing an immediate hiring freeze and postponing other expenses until next year.

"When we looked again in August, we realized there was a real slowing down of the economic context," said executive committee chair Dominique Ollivier.

A significant source of revenue for the city is the so-called "welcome tax" that's paid every time there's a real estate transaction. However, fewer people bought properties this year, adding to the budget shortfall.

Natural disasters, such as this spring's ice storm and this summer's flooding, caused further pressure on city finances. The city also collected millions less in parking tickets due to police staffing shortages.

The city won't fill up to 400 vacant positions and will postpone non-urgent spending to compensate for the loss.

The administration insists services won't be affected.

"Snow removal will still happen, our libraries will still be open, and our services will still be there. You'll still get your permits. That's our core business we're going to preserve," said Ollivier.

The city said if the cuts aren't made, it could increase next year's tax bill for residents.

"There are two more months to go … and we put provisions in order not to impact 2024," said Serge Lamontagne, the city's director general.

The executive committee said there would be a tax increase but promised the average wouldn't exceed the inflation rate.

Inflation, so far, is at 5.2 per cent, said Ollivier, promising the increase will be below that.

The opposition said the city should have seen this coming.

"Clearly, the chickens are coming home to roost," said Ensemble Montreal's Alan DeSousa, a member of the city's finance commission. "We have warned the administration over the years that the economic situation was fragile."

Projet Montreal is expected to present its contingency plan to city council next week.