Council gives green light to draft budget with 2.5% tax hike cap - Action News
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Ottawa

Council gives green light to draft budget with 2.5% tax hike cap

Mayor Mark Sutcliffe may have run on a promise not to increase property taxes more than 2.5 per cent, but one-third of the newly elected council has not signed onto that pledge, worried that it won't provide the city with the money it needs to serve residents.

A number of councillors worried city won't have enough money to meet resident needs

Troster says she's 'very concerned' about the city's tax cap

2 years ago
Duration 1:19
Somerset Coun. Ariel Troster said she understands Mayor Sutcliffe's intention to not reduce services, but she's "having trouble making the math work."

Mayor Mark Sutcliffe may have run on a promise not to increase property taxes more than 2.5 per cent, but one-third of the newly elected council has not signed onto that pledge, worried that it won't provide the city with the money it needs to serve residents.

On Wednesday, council spent more than three hours debating how staff should structure next year's budget, with particular emphasis on what the tax increase target should be.

It's a seemingly technical discussion that College Coun. Laine Johnson nevertheless called "one of the sexiest days in city council" that "will be a meal for the media."

The "sexiness" of the discussion notwithstanding, the debate was clearly difficult for a number of councillorswho said they understood the need to keep expenses for residents as low as possible during these financially difficult times, but also didn't see how the city could keep up with infrastructure and services with a tax increase well below the rate of inflation.

Tax increases that are drastically less than inflation ultimately translate into decreased service levels.-Rideau-Rockcliffe Coun. Rawlson King

Johnson said she had a "deep discomfort" with the choice she mentioned being stunned at seeing a box of cereal selling for $9and in the end voted against the tax cap.

So did Somerset Coun. Ariel Troster, who said affordability means something different in her ward, which had the lowest median income and highest level of poverty of any in the city and whose residents rely on city services.

"When I visited a group of teenagers at The Door drop-in centre, I asked them to speak with me about their hopes and dreams for the city, one of them said to me, 'I wish there were food banks that were closer to my house,'" she told council.

"At the end of the daythe bus that doesn't come, the pool that gets drained at 5 p.m. on a super-hot day, those are signs of a city that's not working for people."

Troster acknowledged the mayor's commitment not to cut services to reach his tax goal, but said she was "having trouble making the math work."

People walk outside an institutional building on a gloomy day.
People walk outside Ottawa City Hall on Dec. 7, 2022. (Francis Ferland/CBC)

Indeed, a number ofcouncillors pointed out that the city couldn't catch up on sidewalk and road repairs, affordable housing or social services even with the three per cent tax increases in the last term of council.

"The reality is that tax increases that are drastically less than inflation ultimately translate into decreased service levels along with fewer investments in transit, infrastructure, affordable housing and social services," argued Rideau-Rockcliffe Coun. Rawlson King.

He also pointed to the recent LRT inquiry into the troubled Confederation Line as a reminder that "setting arbitrary and unrealistic cost targets can lead to serious, negative consequences."

In addition to Johnson, Troster and King, six other councillors voted against directing staff to create a budget with a two to 2.5 per cent tax increase: RiverCoun. Riley Brockington, Alta VistaCoun. Marty Carr, Knoxdale-Merivale Coun. Sean Devine, BayCoun. Theresa Kavanagh, KitchissippiCoun. Jeff Leiperand Capital Coun. Shawn Menard.

Gloucester-SouthgateCoun. Jessica Bradley voted in favour of the budget direction, but dissented on the specific instructions to direct the police services board to developa budget with a 2.5 per cent tax increase.

Transit fare freeze, cuts to some fees

Staff made the point that the city isn't affected by all priceincreases, such as food, and that most of itscollectiveagreements are locked in for the next couple years that will see wages increase around two per cent.

That's significant because compensation is the city's largest expense.

Still, the finance office has said the city is under "extraordinary"pressures and pointed out that the construction inflation rate is running at 6.3 per cent.

The municipality will be losing millions of dollars after provincial legislation has waived the fees the city charges for development, is facing insurance hikes andisstill seeing reductions in revenue due to COVID-19.

Transit, in particular, has been hammered by the pandemic. October ridership was just 58 per cent of pre-pandemic levels. In fact, even after a provincial grant, OC Transpo is still facing a $22-million deficit that will have to be covered by transit reserve funds.

Despite the need for revenue and staffrecommended that fares increase by 2.5 per cent council voted in favour of a fare freeze for all transit riders in 2023, which was one of Sutcliffe's campaign pledges.

A city bus makes its way along a Christmas parade route while people in Santa Claus hats walk beside it.
Council voted to freeze transit fares next year, although one councillor expressed concern about the effects of the $5 million of lost revenue that will create. (Rebecca Kwan/Radio-Canada)

Brockington, who repeatedly professed his skepticism of a budget based on a 2.5 per cent tax increase, voted against the freezebecause he was worried about how the city would make up that loss of revenue in the future.

That's especially true because the budget will be based on a transit levy the tax-funded part of the transit budget of just two to 2.5 per cent.

Last year, the transit levy was almost double at 4.5 per cent.

Kanata South Coun. Allan Hubley and Rideau-Jock Coun. David Brown also voted against the fare freeze.

Council also directed staff to figure out how to cut fees by 10 per cent for recreational programs targeted to children and youth, and bring forward other options to offer free or low cost sessions for low-income families for activities like swimming and skating.

Sutcliffehad promised a 10 per cent across-the-board decrease in program fees for families that his campaign team said would cost $2 million.

Since coming to office, the mayor said he's heard from other council members and staff thatcuts to program fees that are aimed at more vulnerable groups could do more good.

However, staff said the current plan would only cost about $400,000, far less thanthe $2 million Sutcliffe promised in his campaign.

Not the last word on the budget

None of council's decisions are final,they are simply directions to the city finance department the parameters of how to build the draft budget that will be tabled in the new year.

While the process makes it difficult to change the budget at the committee level, in theory council can vote on its final deliberation day to move money between departmentsand even to increase taxes. In each of the 12 years that Jim Watson was mayor, the final budget looked virtually identical to the draft version.

The 2023 budget process is both later and shorter than usual due to the municipal election in October. Usually the final budget would have been voted on this week.

Instead, the draft budget is set to be tabled on Feb. 1, cycle through all committees when members of the public can make delegations and the final budget should be voted on by full council on March 1.