Red ink – the City Budget and the costs of carrying a $2.4 Billion debt!

DDuring City Council’s September 25th Council meeting, Councillors approved the 2020 Budget Directions Report. This approval means taxpayers have a pretty good idea of what to expect in the 2020 budget.

There was some talk from Councillors about the possibility of allowing property taxes to exceed the mayor’s 3% cap. Absent from the discussion was the opportunity of finding savings in the upcoming budget instead of raising property taxes.

On September 27th, Councillor Carol Anne Meehan, the former CTV news anchor and current Councillor for Gloucester-South Nepean published an OP-ED in the Ottawa Citizen which laid out several facts regarding the City’s debt costs. Councillor Meehan highlighted the 2019 debt cost to taxpayers, including principal and interest payments and sinking fund contributions, which are payments made to a savings account used to pay off loans. The cost in 2019 is $349 million annually or $1.4 billion between now and 2022.

Another way for taxpayers to understand how much $349 million is worth to the City is to consider it would require a 21 percent tax increase to cover it.  Or, as stated in Meehan’s article ” If debt servicing were its own department, the city would spend about the same on Fire Service, Roads and, Ottawa Public Health as it does on debt.” That is how much of taxpayers money is set aside or paid to the City’s creditors each year. 

It is little wonder that when residents demand better service, the response from Councillors is that there isn’t any money.

Before amalgamation, the smaller townships and municipalities focused on funding core services, like roads, garbage and snowplowing. They simply could not afford to fund programs and services that were not absolutely necessary. Ottawa is different. The tax base is vast and politicians are pulled in many directions leading to what we see now — high taxes, services that do not improve over time and roads that have deteriorated. 

In a previous article published on the HUB, we reported that the City passed a motion that will see $57 million of Federal Gas Taxes spent on infrastructure repair between now and 2022, but the underlying spending gap for infrastructure repair will now take eight years to close, instead of the five years we were promised.

Snowplowing standards have not seen a meaningful review since the early 2000s, yet the City spends more on winter maintenance every year than it budgets for. Water rates are rising, the cost of garbage collection is increasing by $10 next year, and the transit levy on our property taxes is going up by 6.4 percent.

Paying more in taxes every year raises legitimate questions of value for money and how much the taxpayer can afford. It is true that new services like the LRT are great successes to celebrate. However, maintaining ever expanding infrastructure and core services simply through debt, tax and service charge increases is not sustainable. Finding savings within the existing budget would be a good place to start the next budget cycle.

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