City Has Budget Hole Of Hundreds Of Millions Of Dollars

This is a release from the City of Ottawa:

Ottawa Mayor Mark Sutcliffe today launched a campaign calling on residents to join him in demanding fair funding from the provincial and federal governments. Highlighting a severe financial crisis, the Mayor emphasized Ottawa’s unique position and the critical need for equitable support.

“Our city is facing unprecedented financial challenges that are not of our making,” said Mayor Sutcliffe. “As the nation’s capital, we are uniquely impacted by the decisions of other levels of government. This can’t continue or we will face historic challenges in our next budget. We deserve our fair share.”

Mayor Sutcliffe outlined two significant areas where Ottawa is disproportionately burdened compared to other cities: federal payments in lieu of taxes (PILTs) and transit funding.

“Every municipality is facing big challenges, but Ottawa’s challenges are unique among Canadian cities,” said Mayor Sutcliffe. “We are the nation’s capital. We are the second largest city in Ontario. The decisions of the federal government have an enormous impact on our city, more than any other city in the country.”

As the most significant example, Mayor Sutcliffe pointed to significant reductions in federal payments to Ottawa for property taxes.

“Imagine if you, as a property owner, could decide how much you pay in property taxes every year,” he said. “That’s exactly what the federal government gets to do. They decide how much their property is worth and what tax rate they pay. And they’ve stopped paying their fair share, meaning local property taxpayers have to make up the difference.”

Over the past eight years, while Ottawa residents and businesses have seen increases in their property taxes, the federal government has unilaterally decided to reduce its payments from $194 million to $164 million per year.

“If the federal government were paying its fair share, we’d be receiving almost $100 million more from them,” said Mayor Sutcliffe. “That’s the equivalent of a 5% tax increase that’s been incurred by residents.”

City finance staff estimate that the federal government’s plans to exit 50% of its Ottawa properties will significantly impact the City’s finances, resulting in lost property tax revenue of approximately $445 million over the next ten years.

The Mayor also highlighted inequities in transit funding, stating, “Ottawa built a transit system largely to serve our largest employer, the federal government. The decline in downtown ridership from federal public servants has cost the city $36 million a year in lost fare revenue, contributing to a $140 million annual shortfall in the transit budget.”

Ottawa does not receive the same capital funding for transit projects as other cities like Toronto. “While major transit infrastructure in the GTA is fully funded by the provincial and/or federal governments, Ottawa residents are expected to pay 33%. Rising costs have resulted in Ottawa taxpayers covering 56% of Phase 2 light rail construction costs,” Mayor Sutcliffe explained. “It’s completely unfair that we pay 56% of transit capital costs when Toronto residents pay nothing. We deserve a fair funding model for transit.”

To address these issues, Mayor Sutcliffe outlined five key requests to the federal and provincial governments:

• Reimburse unpaid payments in lieu of taxes (PILTs): The federal government must pay what it owes for the past five years, approximately $100 million.
• Ensure fair PILTs: The federal government should stop unilaterally reducing payments and pay its fair share of property taxes.
• Guarantee PILT levels during transition: Maintain PILT payments at the appropriate amount while exiting up to 50% of its Ottawa properties.
• Restore fair transit funding: Reinstate the one-third funding model for transit projects so local taxpayers aren’t burdened with 56% of capital costs.
• Support sustainable transit: Provide operational funds for the next three years to ensure Ottawa’s transit system can recover from recent challenges and sustain operations for the future.

“These are not unreasonable requests,” Mayor Sutcliffe asserted. “We are simply asking for fairness. Ottawa deserves the same support as other cities, and it’s time for the federal and provincial governments to do the right thing.”

Mayor Sutcliffe is urging Ottawa residents to join the campaign for fairness. “I need you to join me in demanding that Ottawa gets the help we need, that we get our fair share, and that we get it now.”

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