Ottawa

City wrestles with 3% tax cap as budget pressure builds

City staff are preparing a 2020 budget that will again cap the property tax increase at three per cent, but to achieve that some departments will have to cinch their belts tighter than others

Provincial funding cuts, lost gas tax revenue to pose challenge in 2020

City staff have started building a 2020 municipal budget that will keep any property tax increase below three per cent. (Jean-Sebastien Marier/CBC)

City staff are preparing a 2020 budget that will again cap the property tax increase at three per cent, but to achieve that some departments will have to cinch their belts tighter than others

If the roadmap drawn up by deputy city treasurer Isabelle Jasmin is endorsed by city council, the average urban homeowner will pay an extra $109 next year, for an average tax bill of $3,672.

While that's in line with the mayor's re-election pledge to keep the annual tax increase below three per cent, the transit levy would rise by 6.4 per cent in 2020, up from 3.5 per cent this year. That's to help offset a loss in provincial gas tax revenue, the transition to LRT, increasing fuel costs and various contract settlements.

Most city departments, including Ottawa Public Health and the Ottawa Public Library, will be asked to limit any spending increases to two per cent.

The Ottawa Police Service, which often struggles to stay within the tax cap, is again being asked to manage with a three per cent rise.

A budget under pressure

Municipalities across Ontario have been eyeing 2020 with trepidation ever since the PC government unveiled its first budget in April 2019. It included cuts to everything from paramedics and public health to conservation authorities.

Under pressure from municipalities, which had already passed their 2019 budgets, Premier Doug Ford later changed course and decided to postpone the cuts for a year.

In Ottawa, the treasurer's office has calculated the cuts will cost the city $13.8 million in 2020.

The city is being asked to pay a greater share of the cost of both children's services and public health, amounting to $6.3 million each. Meanwhile, a separate long-term care fund has been cancelled, leading to a loss of another $1.2 million.

The city was also counting on getting twice the revenue from Ontario gas taxes next year, but the PCs decided not to uphold that Liberal promise.

Gas tax shuffle

An extra $19 million in federal gas tax money in each of the next three years is expected to soften the blow for Ottawa.

City staff are now proposing spending that money on roads, bridges and cycling infrastructure, while money previously set aside for those projects will now go toward transit, replacing the lost provincial gas tax revenue. 

"You're taking money from one fund to another. It's perfectly legitimate to do that," Mayor Jim Watson said Tuesday. 

"It allows us to make up the gap that we need for Phase 2 [of light rail construction], and at the same time keep up the aggressive paving work on some streets that are in really, really rough shape."

The average water bill is expected to increase by 5.2 per cent next year. That pays for drinking water, sewers and culverts.

Departmental draft budgets are to be tabled Nov. 6.

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