Denley: City of Ottawa's draft budget looks like a winner

The City of Ottawa draft budget released today is moderate and reasonable, just what one would expect from our new mayor, Mark Sutcliffe. Taxes are up, but no more than the 2.5 per cent he promised. Sutcliffe has delivered on his platform with more money for mental health, climate change, anti-racism, social housing, policing, cycling, sidewalks and roads.

The city can achieve this because of robust growth in the number of properties, which boosts tax revenue 2.2 per cent. Combine that with the tax increase and some modest efficiencies, and the city has about $100 million in new revenue.

Whether you are a basic services person or one who believes that the city has an important social role in the community, there is something in this budget for you. It’s a good political read on Ottawans’ preference for city government that is fiscally cautious while not abandoning social priorities.

The spending on roads is both notable and welcome. Sutcliffe promised to boost road-repair spending by $25 million a year, but the draft budget adds $5 million on top of that. That’s 31 per cent above the four-year average.

The budget also identifies $53.9 million in efficiencies, the start of a new approach that Sutcliffe promised in the election campaign. The majority of the so-called efficiencies are attributed to “transit capital alignment,” a grab bag of transit capital spending changes.

Not much has been cut from operating expenses yet, but Sutcliffe says that work will begin in earnest after the budget is passed, to help control spending in future budgets.

It’s always good when a politician promises to do something, then actually does it. Failure to do so is what underlies the broad-based public cynicism about politics and those who practise it.

Despite all of that, there’s a problem and it’s not a small one. While the budget is balanced in the breadth of priorities it addresses, it isn’t balanced in terms of the bottom line.

OC Transpo continues to suffer from the ridership decline that started during the pandemic. Last year, city staff rather optimistically predicted that ridership would return to 85 per cent of pre-pandemic levels. The real number was 65 per cent. This year, the budget targets ridership at 70 per cent of the pre-pandemic number. That leaves a budget hole of $39 million.

The city is asking the federal and provincial governments to fill that hole for it. Last year, the two governments gave Ottawa $63.3 million to help overcome an $85.5 million transit deficit. Neither government has committed to anything yet for this year.

Even if the city gets money to eliminate the transit deficit this time, it’s unrealistic to expect that kind of bailout indefinitely. Some clarity on future intentions from the other governments would be useful, but the most likely scenario is that the city will have to reduce transit service, something Sutcliffe alluded to Wednesday.

The city is also facing revenue losses from changes the provincial government made in order to speed up housing construction. Those new rules will reduce the amount of money the city receives in development charges by an estimated $130 million over five years. The province has spoken vaguely of compensation. Since this money goes into an account for future growth costs, the effect of any shortfall is not immediate.

Ottawa’s budget problems look small compared to the mess in Toronto. Taxpayers there are facing a proposed seven per cent tax increase — and that still leaves the city with a $993 million deficit, which it attributes to COVID-related costs. The city’s transit operation alone is short $366 million. To help, Toronto has cut service levels and raised fares 10 cents a ride.

Overall, this is a promising budget for Ottawa, but it will require constant diligence to keep project costs and spending under control.

Randall Denley is an Ottawa political commentator and author. Contact him at randalldenley1@gmail.com

1. Sutcliffe unveils 'tight' draft budget with priority investments and efficiencies

2. Transit fares frozen while OC Transpo budget to account for falling ridership: