Montreal touts budget surplus, financial resilience but city debt is growing

Despite two years of pandemic restrictions and a mounting debt, Montreal claims it is in good shape financially and has a budget surplus it plans to use quickly to address climate change and the shortage of affordable housing.

The city's net debt grew by $296 million in 2021 — an increase of nearly five per cent compared to 2020 — for a total of $6.6 billion dollars. 

During a news conference on Wednesday, the city downplayed the debt, saying its effects would be mitigated by the growing value of its assets. 

"We have fixed assets worth close to $13.7 billion, so if we do the ratio, we're at 50 per cent. I think it's a reasonable ratio," said Raoul Cyr, the city's director of accounting and financing.

"So we have to be careful when it comes to the net debt. Yes, it's maybe a bit high according to some people, but the city nonetheless holds value that supports this debt a lot."

Dominique Ollivier, chair of the city's executive committee, spent much more time highlighting the city's surplus of $293 million.

She says the surplus is a sign that Montreal is well on its way to recovering from the COVID-19 pandemic.

Here's a breakdown of how the city plans to use the extra cash:

• About $100 million to pay down its debt. 
• $40 million to accelerate affordable housing projects.
• $17 million to accelerate "large development projects," such as the old Hippodrome site.
• $15 million to fight climate change.
• $7 million to fund mobility projects.
• $5 million for projects to promote equity.

"Our vision is based on ensuring a better quality of life for the population in a greener, more inclusive, more affordable city," Ollivier said.

"After a steep slowdown in 2020 due to the impact of the pandemic, investments are gradually returning to the level of the previous years."

Despite the city's optimistic outlook, the effects of the pandemic were still evident in Wednesday's budget update. Although the city itself posted a surplus, the urban agglomeration of Montreal, which includes all the municipalities on the island, has deficit is $66 million.

Last year's deficit was nearly $200 million.