Draft Budget 2025: First Reaction

Residents will by this point have heard about the City’s Draft 2025 Budget. You can read more about the draft budget here.

I have begun reviewing budget documents, and while it will take me a few days to fully assess the budget and understand fully the local impacts of the budget, I do have some initial reactions.

The budget proposes a 2.9% property tax increase and a significant increase to the transit levy. Taken together, the overall tax increase proposed in the budget works out to be 3.9% for most residents in the City.

Rural residents’ will see a lower tax increase as the relative transit levy increase in rural Ottawa will be lower. Residents who are in Rural Transit Area - A will see a total of a 3.2% increase in taxes and residents in Rural Transit Area - B will see a 3% tax increase.

Based on the average assessed property value, most residents in rural Ottawa will be paying roughly $100 to $115 more than what they paid in the 2024 tax year.

I am very concerned about this tax increase. At a time when everyone is feeling the pinch financially, we cannot continue asking residents to pay more and more.

I would prefer to see the City tightening its belt, looking for opportunities to reduce costs, and delivering programs, services, and infrastructure at a lower overall cost. I believe there is more work to be done in these areas before asking for residents to pay more.

That being said, I was encouraged to read that $54.2 million dollars in savings were identified for the 2025 Budget. That is the equivalent of close to a 2.5% property tax increase. Since this term of Council’s first budget in 2023, the combined savings that have been realized are about $208 million – close to the equivalent of a 10% property tax increase.

I was also pleased to read that the City continues to invest at significant levels into desperately needed priority areas. $104 million is being invested to improve our roads and sidewalks, of which $89.6 million is being allocated for road rehabilitation, resurfacing and upgrades across the municipality. The investment into traffic infrastructure, such as stop lights, will be increased from less than $5 million in 2024 to over $20 million in 2025. 23 paramedics, 22 firefighters, and 50 new police officers will be hired as a result of this budget.

In my view, the weakest area of the budget has to do with transit funding. Transit is supposed to be funded in equal measure by levies on taxes and fares paid by riders. It’s right now closer to 70% levies and 30% fares. The significant increase in levies and modest increase in fares has the issue exactly backwards. What the City should be doing is making those who use the service pay a little bit more for their ride. Those who do not use transit should not be subsidizing those who do to such a significant extent.

For some additional context, my office and I did some calculations. Including the proposed draft 2025 budget, since 2020, property taxes have increased by about 17% in Ottawa.* Over the same period, inflation has gone up by about 18%, according to CPI data from Statistics Canada.

Inflation increases many hard costs that the City has to pay. Property taxes are tied to assessed values, not sale values, and assessed values have not been reassessed in many years. This means that the only way for the City to keep up with costs is to raise revenues, reduce activities, or do activities more efficiently. My preference is that the maximum amount of effort should be spent on doing things more efficiently.  

Ottawa has had a lower rate of tax growth than many other large municipalities. For instance, since 2020, Toronto has increased its taxes by about 26.6%; this doesn’t include their 2025 budget. In just their 2024 budget, Toronto increased its taxes by 9.5%.

The main difference between Toronto and Ottawa has been that, in Ottawa, the Mayor and Council have prioritized finding savings. If not for the savings and efficiencies that had been identified in this term of Council, a similar tax increase would have been required to support the investments made in this proposed budget.

For me, the upshot is that the City can and should do more to save money. We are not doing as badly as some of our peers, but we can and indeed must do better.

In the coming days and weeks, I will be looking for more opportunities for efficiencies and will update the community on the investments that our ward is receiving in this budget. I am unsure how I will vote on the budget at this time. What I want to see is that the City has done all that it can to tighten its belt before asking for more money and that our communities are receiving their fair share of investments in the budget.

*Note: This does not include other elements of property tax bills, such as transit levies, that may have escalated at different rates.