'Raucous' budget season begins in Ottawa

It's been a long, longtime some15 years since a budget process at Ottawa city hall has raised thespectre of hugecutsor apainful propertytax hike.

Brace yourself, because Ottawa is on a financial roller-coaster not seen since the days of former mayor Larry O'Brien. Council relationships are not off track as they wereback then, but this budget season is shaping up to beas unpredictable as those budgets were.

Thenext few months of deliberations about a 2025 spending plan could bring either a thrilling high or some tough lows that will be hard to stomach.

Could you handle a9.9 per cent increase onyour property tax bill after a decade in the two to three per cent range?

How about having to pay $6.65 fora single ride on OC Transpo?

Another worrisomeoption would see OC Transpo make$120 million in cuts, one-sixth of what it costs to run the system each year. Or, the deeply discounted passes for students and people on low incomes could be overhauled.

These worst cases won't come to pass, but they're down on paper in a budget directionsdocument that goes before the finance and corporate services committee Monday. We haven't usually seen such dire scenarios set out like that.

What city council could actuallyface is finding some combination of these "levers."Local politicianshope it doesn't cometo that.

OC Transpo's$120M problem

The whole problem lies at OC Transpo, which has a $120-million hole that must be filled. Municipalities can't run budget deficits.

On the one side, revenue is not what it was countingon when it decided to build a train system pre-pandemic. It's selling one-third of the adult transitpasses it did in 2019. Most current riders are seniors, studentsand people on a lower income, all paying a discounted fare.

• OC Transpo financials 'much worse' than expected
• Fuel, maintenance costs driving up price of running Trillium Line
• LRT Stage 3 is at risk. How can Ottawa get it back on the rails?

On the other hand, costs of running rail are about to climb to $176 million a year as the Trillium Line opens to the south, and the Confederation Line stretches east to Orlans.

Plus, debt payments forLRT construction kick in, including $137 million in 2025, according to city staff. That will push Ottawa's total transit operations budget to $870 million, according to figures provided by the city.

There's now a structural deficit thatwon't go away, the mayor says.

It wouldgrow bigger in the years to come, adding up to a whopping $8.9 billion over 30 years if staff's projections prove correct. It won't be solved with one-time fixes. Transit reserves are low.

Coun. Riley Brockingtonhad been regularly asking questions about the sustainability of transit whenridership didn't bounce back post-COVID. He didn't think those budgets were sound, he said last week, andshortfalls in the past few years get harder with each budget cycle.

"This will probably be the most important year for the transit budget perhaps in the history of OC Transpo," he said.

Even before the budget directions report was made public last week, Coun. Jeff Leiper was telling his residents to expect a "raucous budget season."

Mayor's messaging

Some critics would have preferred if Ottawa Mayor Mark Sutcliffe's first two budgets had increased taxes by more than 2.5 per cent, which was below the rate of inflation and below what other cities did.

After searching for "efficiencies" andmore or less staying the course, Sutcliffe has been signalling for a yearthat his third budget would be difficult.

In August, he stated into a microphonethat the capital city is in a "financial crisis."He wants to see if he can get what he believes Ottawa deserves from other governments before turning to toughlocal options.

• Mayor says Ottawa facing 'financial crisis,' blames feds for shortchanging city

The city is being shortchanged both by the federal government and the provincial one, he argues. Federal properties are getting away with paying less than they should in lieu of property taxes, he says.

Ontario, meanwhile, made this city foot the bill for far more LRT construction than its counterparts in Toronto and the Golden Horseshoe. Neither level gives decent support to run a modern-day transit system, Sutcliffe says.

He wants them to be "fair" to Ottawa and help the city balance its books.Full city council backed him up, and most believe he makes a strong case.

Meanwhile, he said he needs to be fully transparent with residents about just how bad things are.

Cities seek more revenue

But laying outbroad, dire options for the budget's direction was a "scare tactic"meant to get upper levels of government to pony up, said Coun. Shawn Menard.The cityshouldinstead show leadership by statingmore clearly the tough decisions itintends to make, he said, and then adjust if good news arrives.

Sutcliffe isn't the only one, however, to paint a stark picture ofwhat lies ahead fora transit system without aninflux of cash.

In B.C., TransitLinksaid in June that it's facing a shortfall five times greater than Ottawa's, andbus service would be cut in half without sustainable funding.

• TransLink warns funding shortfall may lead to deep service cuts
• Canada's public transit faces a funding crisis unless new revenue streams are found: analysis

There is also a constant theme in cities across the country. They say they do too many things in the modern era thatshouldn't be borne by aproperty taxpayers. They've been calling for a "new deal."Running a transit systemis expensive, they say.

It's unclear, though, if the mayor's particular calls will be answered in time.

Federal public services and procurement officials "continue to work with the city" about thosepayments in lieu of taxes to make sure they're"fair,andequitable, and consistent" with legislation, that minister's office wrote in early September.

Meanwhile, the federal government isn't in the business of subsidizing transit operations, wrote a spokesperson for Housing, Infrastructure and CommunitiesMinisterSean Fraser. That falls to the province.

• As transit funding gap between Ottawa and Toronto widens, lobbying revs up

For its part, the Ontario finance minister's spokespersonColin Blacharwrote it's "crucial that the federal government steps up as a full partner," while also noting the half-billion-dollar deal it signed with Ottawa just a few months ago. That deal didn't include transit money, although the mayor says the idea was negotiations would continue.

The mayorof Ottawa has 86 days to securefunding before council has to take a final vote on the budget. Between now and then are countless consultations, meetings and debates.

Let's see how we all enjoy the ride.

Ottawa Morning10:46Ottawa city council will start debating its budget today

CBC Ottawa reporter Kate Porter walks us through the details.