Suddenly, this city's budget is in disarray

At the end of last year, the city boasted a surplus of nearly $19 million. Five short months later, Ottawa's finances are, in  Mayor Jim Watson's own words, "in chaos," throwing into question the future of municipal services and tax increases alike.

Weather, PC government proving unpredictable forces threatening chaos on municipal finances

From severe weather like last year's winter and this spring's flooding, to provincial cuts, the city's budget is under pressure from all sides. (Marc-André Cossette/CBC)

At the end of last year, the city boasted a surplus of nearly $19 million. Five short months later, Ottawa's finances are, in  Mayor Jim Watson's own words, "in chaos," throwing into question the future of municipal services and tax increases alike.

Here's why.

Started 2019 in the red

The first three months of 2019 kicked Ottawa's financial plan for the year in the teeth. 

The severe winter weather demolished the city's snow maintenance budget. Chronically underfunded for more than a decade, the city ended the first quarter with a whopping $16.2 million in the winter maintenance budget.

There were surpluses in other areas of the city that took up much of the slack, but we still ended the first three months of 2019 in the red to the tune of $5.7 million.

Extreme weather

The harsh winter was followed by unprecedented flooding, which led the city to declare a state of emergency on April 25.

While the mayor has rightly said this isn't the time for penny-pinching, the bill for the floods is likely to cost millions, counting staffing — many city workers have been putting in substantial overtime — supplies including a million sandbags, and repairing damaged roads and other infrastructure.

It's unclear what kind of help the city will get to cover these costs from other levels of government.

The costs from flooding will total in the millions. (Justin Tang/The Canadian Press)

Unexpected provincial cuts

Then there are the unexpected provincial cuts to municipal budgets, most of which were passed months ago, which mayors across Ontario decried as "unilateral" and "retroactive."

Watson initially said he was "delighted" and "pleased" by the Progressive Conservative government's first budget, which included commitments to Ottawa's LRT Stage 2 and the continuation of other big ticket projects such as the new Civic campus of The Ottawa Hospital.

But the details of that budget have turned out to be problematic for cities.

The PCs broke a campaign promise to double the cities' share of the provincial gas tax, additional millions that should have started flowing to Ottawa this year. The financing of the city's long-term transit plans counted on that money.

Also out of the blue, the province announced it will fund public health and paramedics by millions less this year. 

And the province's new Bill 108, which is supposed to increase Ontario's housing supply, threatens to make it much more difficult for cities to pay for parks, libraries and community centres.

Mayor Jim Watson says provincial budget cuts are hitting the city hard. The province has asked for 4 per cent to be cut from municipal budgets, representing around $150 million for Ottawa. 1:01

Worries about future cuts

To further complicate matters, Premier Doug Ford offered earlier this week to help pay for line-by-line audits of municipal spending to help find four per cent in savings. After all, said the premier, his government is looking to cut four cents on the dollar, and cities should, too.

Watson's answer? No thanks. Ditto from Toronto Mayor John Tory.

A four per cent cut in city spending amounts to a whopping $150 million for Ottawa. Consider that a property tax increase of a single percentage point raises about $10 million. 

There are always some savings to be found in any budget, but cutting $150 million from city spending is going to result in reduced services, layoffs or both.

Now, the premier's office has been clear that the offer of an audit was voluntary: cities are not being mandated to cut four per cent of their spending.

Still, considering the other surprise cuts that have been revealed in the past month, there's clearly a worry among municipal officials that more cuts may be coming. After all, the budget stated that the "growth" in transfer payments from the province to municipalities has been "unsustainable," and that the government will be looking for "greater efficiencies."

Mayor Jim Watson, left, declined Ontario Premier Doug Ford's offer to help pay for an audit of the city's spending. (CBC)

Keeping track 

It's hard to keep track of the myriad financial pressures on the city.

The treasurer is expected to report to council next month about the consequences of the province's cuts to the city, as well as the tally for the flood.

In addition to weather events and provincial cuts, Ottawa is dealing with other unanticipated costs that arise when running a big city. 

The LRT delay, for example, was costing at least $25 million at last count. But that assumed a launch date around Canada Day. With a completion date unconfirmed, another delay will only further boost costs to the city.

The OC Transpo bus crash earlier this year, which killed three and seriously injured many others, has led to a $3-million annual increase — a 120 per cent jump — in the city's insurance rates.

What's next?

With spending shortfalls likely this year, the city will have to dip into its healthy reserve funds to balance the 2019 budget.

The real problems start in 2020.

The reserves used this year need to be replenished next year — the tax stabilization reserve fund, for example, will need a $20-million injection if it's to be brought up to the council-approved levels by next year.

Council may have to make some hard choices for 2020, such as deciding how, or even whether, it will fund services that the province doesn't. That's on top of the city's ongoing spending pressures, from potholes to safer cycling infrastructure.

Watson said this week he's "still very much committed" to his campaign promise to keep tax increases to three per cent.

That's laudable, but is it doable?

That depends. Is council committed to keeping all the services and amenities the city now provides? If so, that might be difficult given two highly unpredictable factors affecting future budgets: the weather and the provincial government.

About the Author

Joanne Chianello

City affairs analyst

Joanne Chianello is an award-winning journalist and CBC Ottawa's city affairs analyst. You can email her at or tweet her at @jchianello.


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