Ottawa is being Shortchanged
Earlier this month, Mayor Sutcliffe held a press conference to talk about the City’s budget being negatively affected by years’ worth of funding imbalances from upper levels of government, particularly the Federal government. With budget season fast approaching, it’s worth reviewing this issue in detail.
The biggest financial shortfall has to do with how Ottawa pays for transit.
OC Transpo covers a geographic area comparable to the regional transit provided by the GO Train in the Greater Toronto Area (GTA). However, unlike several GTA municipalities who enjoy transit projects being fully funded by upper levels of government, Ottawa has been left to pay for over 50% of the costs for major projects, including Stage 2 of the LRT. It is estimated that Ottawa residents, through federal and provincial taxes, contribute more than 16 times the amount of money towards GTA transit projects compared to projects in Ottawa.
This is a major reason why our operating budget shortfall for transit is projected to be approximately $140 million annually until 2028. With population growth and a massive jurisdictional size, you can quickly see how unsustainable this model is for Ottawa.
As the largest employer in the National Capital Region, the Federal government owns many properties in Ottawa, including approximately 90 office buildings. Their properties are exempt from typical municipal property taxes and instead the Federal government provides “Payments in Lieu of Taxes” (PILTs) to municipalities. These payments are intended to fairly contribute to the costs of municipal services needed to service these properties, ensuring an equitable sharing of the city's financial responsibilities.
The problem? The federal government effectively gets to decide how much it pays in PILTs.
There has been a decline in PILT contributions from federal entities such as the National Capital Commission (NCC), Canada Post, and other agencies. Over the past five years, this reduction has resulted in an estimated shortfall of $99.2 million. If PILT contributions continue to decline, Ottawa's residents will face an increased financial burden, leading to higher property taxes or reduced municipal services.
The fact is that, with increased costs due to inflation, decreased transit ridership since the pandemic, and the federal government refusing to pay its taxes, the upcoming City budget will need to be exceptionally efficient.
At the same time, the communities in our ward have been patiently waiting for vital priorities to be adequately funded. Whether it comes to road resurfacing, traffic signals, culvert maintenance and replacement, or any other capital expenses, rural Ottawa needs continued investments to bring us up to par. The challenge will be to secure these local priorities while also finding the efficiencies needed to keep property taxes low.
As I mentioned before, there is more work that needs to be done by the City to be more efficient and further pursue cost-saving initiatives. The City needs to balance investing into priorities and services that reflect the needs of our communities while living within its means. Since being elected, I have been scrupulous about where and how the City spends its money and I will continue to do so to keep taxes low.
Ottawa is being shortchanged. Some upper government representatives are quick to dismiss our problems as being the result of financial mismanagement, but that is disingenuous. We simply do not have the resources to sustain our critical needs as a city. It is my hope that the Mayor’s call for fairness for Ottawa will be answered by the federal government.
As we approach the City’s budget season starting this Fall, I encourage everyone to share their feedback by completing the online poll here. There will also be other opportunities for residents to inform the 2025 budget process which I will share as more information becomes available.