Ottawa

City of Ottawa faces largest deficit ever in 2015 at $41M

The City of Ottawa's $41-million deficit in 2015 is the largest in the municipality's history, but the mayor promises the tax rate won't surpass two per cent and even calls the budget shortfall an "opportunity."

City treasurer, Marian Simulik, says 2009 deficit of $34M was highest until this year

The City of Ottawa looked like it would save money on the snow clearing budget in January 2015, but that soon changed. (CBC)

The City of Ottawa's $41-million deficit is the largest in the municipality's history, but the mayor promises the tax rate won't surpass two per cent and calls the budget shortfall an "opportunity."

Details of the 2015 budget deficit were provided to the city's finance and economic development committee on Tuesday by Ottawa Mayor Jim Watson, who is also the committee chairman.

The numbers were released online last week, though, revealing some reasons for the shortfall.

For example, the city's public works department is facing a $17.7-million shortfall, blamed largely on the high cost of cleaning up after a series of late winter storms.

According to the report, arbitrated awards to municipal employees belonging to two unions — CUPE 503 and the Civic Institute of Professional Personnel, or CIPP — resulted in an added budget pressure of nearly $10 million.

The province's decision to include some forms of cancer suffered by firefighters as work-related under the Workplace Safety and Insurance Act is expected to cost the city $4 million.

City treasurer Marian Simulik said a combination of factors led to this deficit, which is the largest ever. The next highest came in 2009 at $34 million, Simulik told committee members.

The 2015 budget featured some costly risks, though, according to Coun. Diane Deans. She cautioned the committee about changing the way it sets future budgets.

"We are heading toward a financial crisis," Deans told other members.

"We took chances [in the 2015 budget] … we hoped the stars would align, and they didn't."

$41M deficit an 'opportunity,' mayor says

Watson remained confident the city can dig itself out of this hole, though. He assured reporters the tax rate, currently at 1.75 per cent, won't surpass the two per cent cap.

That was a key promise in Watson's campaign for re-election in 2014.

On Tuesday, the mayor even went as far as calling the $41-million deficit "an opportunity" and "not a crisis."

Savings are coming after a freeze on hiring and discretionary spending announced by city manager Kent Kirkpatrick in July. The city could also dip into reserve funds to help balance the books, including up to $20-million from a rate-supported capital reserve to cover the water and sewer deficit.

With files from the CBC's Alistair Steele

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