Fairness for Ottawa Was Always Going to Fail

Expect to hear that help is just around the corner, until elections provide the Mayor with the excuse to abandon this fruitless campaign.

Six months of wasted effort

Back in August 2024, the Mayor launched his Fairness for Ottawa campaign.

He noted that the City of Ottawa was treated unfairly by the federal government — through shortchanging the city on payments in lieu of taxes (or PILTs, essentially property taxes paid by the feds) — and the provincial government — through less transit operations support than is provided to the Greater Toronto and Hamilton Area. And that the City of Ottawa was paying more than the traditional 1/3rd share of transit capital projects assumed by federal, provincial and municipal partners.

The Mayor called on the feds, among other demands, to transfer to the City $100 million for underpaid PILTs over the past five years.

That never happened.

By the end of the year, the Mayor’s ask has transformed into a call for federal and provincial money to fill the $36 million funding gap in the transit operations budget.

That also never happened.

Doomed from the start

The Fairness campaign is failing for three reasons.

1. Never a lack of fairness

First, there was never a “fairness” issue.

PILTs

The feds use the same PILTs formula for all municipalities across the country. The City of Ottawa is treated no differently than any other Canadian municipality.

The City has never provided any detailed analysis as to how it is shortchanged, so it’s impossible to scrutinize where there is any justification for their assessment. It defies logic, but if the City is willing to make their analysis public, I’ll gladly reconsider whether they have a valid case or not. Although I’m highly skeptical.

Transit operations

The province provides roughly the same per capita support to OC Transpo as it does to the Toronto Transit Commission. As per a recent study of the Financial Accountability Office of Ontario, the province provides $51 per Ottawa resident to OC Transpo and $66 per Toronto resident to the TTC, compared to a provincial average of $42.

Source: Financial Accountability Office of Ontario: Ontario’s Public Transit Agencies: Ridership, Finances and Operating Subsidies

The difference with transit is that the Government of Ontario also funds a regional transportation network for the GTHA. (Ever wondered what the “GO” in GO Train stands for?)

That’s a bigger and more structural issue. The City of Ottawa could make the case that Light Rail should have been a provincial responsibility, and managed through Metrolinx. But that’s something we should have considered a decade or two ago.

Transit capital

The City also says that it’s unfair that federal and provincial governments are not paying their traditional one-third shares of transit capital costs. The City is paying more than half of the capital costs of LRT, but that is simply the terms the City agreed to.

Former Mayor Jim Watson was so confident that light rail would could in “on budget and on time” that he signed off on the one-third formula based on the initial project budget. The City would take on the responsibility for any cost overruns, but no worries, since Jim was certain there would be none.

In hindsight, it was a poor decision, but one that the City fully owns.

2. Unwillingness to take responsibility

Second, the City has made no attempt to put its own fiscal house in order.

It has refused to increase property taxes to fill its fiscal gaps, as other cities have done.

It has also refused to cut frivolous spending, such as the half billion dollar Lansdowne stadium renovation.

3. Bad precedent

Both Premier Doug Ford and (soon to be former) Prime Minister Justin Trudeau have recognized how damaging it would be to bail out Ottawa when the City won’t accept responsibility for its own actions.

Plus, providing support to one municipality would immediately result in thousands of other municipalities across Canada demanding the same. No higher level government is going to open up that Pandora’s Box.

Salvaging the scraps to claim some small victory

So what’s a mayor to do?

Here’s what I see happening in 2025.

First of all, we end up with an early federal election, and possibly an early provincial one. Sutcliffe uses any elections as a reason to abandon his Fairness campaign.

Second, Sutcliffe touts some recently concluded federal agreements to showcase success, even if these have little to do with his Fairness campaign. For example:

• The federal government’s Interim Housing Assistance Program has made $474 million available to help provinces and municipalities accommodate asylum seekers. The City of Ottawa has a $105 million application into that fund, to pay for the controversial Sprung Structures, to build new communal homes and to fund two years of operating expenses. A formal announcement on this money to Ottawa could happen anytime.

• The federal government’s $30 billion Canada Transit Fund made its first announcement late last year, providing $1.2 billion to Toronto to purchase new subway cars. Hopefully, Ottawa City Hall has been negotiating its own transit capital funding deal with the feds.

None of this would be tied to the Mayor’s Fairness campaign (which was about PILTs, transit operations and cost sharing of the LRT capital expenses). But any announcement would give him an opportunity to save face.

The refugee housing has been in the works for months, and it could be made public.

But again with the prorogation, it is too late for the government to make any novel announcements, such as operational funding for OC Transpo.

A better way forward

I agree with the Mayor that cities like Ottawa are underfunded and deserve a larger share of the tax dollar. However, Ottawa is not that different than any other municipality.

There is a structural imbalance in our fiscal federalism. Municipalities are being asked to do far more than they are able with the taxes available to them, and that federal and provincial governments will need to make more fiscal resources available to cities.

Here is a better way forward for Ottawa to mobilize more federal and provincial resources.

1. Stop lone-wolfing it

All Canadian cities are getting the short end of the stick. But one city standing up on its own and crying poor is easy to ignore.

A more effective strategy that cities can adopt is to band together and mount a coordinated and sustained campaign to pressure higher levels of government.

Creating a new fiscal arrangement for cities has long been a goal of the Federation of Canadian Municipalities, but those efforts need to be significantly scaled up.

2. Work on shared federal and provincial priorities

Let me state the obvious: governments make discretionary money available for their priorities. They are not generally in the business of making money available for priorities they don’t care about.

So if the City of Ottawa wants to secure more federal funding, they should be looking for common concerns where the federal government wants to spend money.

I talked about one example of this recently in the Ottawa Citizen. Essentially, there could be plenty of federal money for downtown revitalization, but it would require the City to cooperate on federal priorities, including getting trucks out of downtown.

The City of Ottawa has historically underperformed in attracting its fair share of federal and provincial funding. But that’s on the City. City Hall has been too inward looking and unwilling to meet funding partners half way.

Time to turn a new leaf

The Fairness for Ottawa campaign has a sad and short history. It’s not hard to see why it has failed to deliver.

It’s time to shut it down. The Mayor should shift his energies to getting the City’s own fiscal house in order.