What I'm Looking For in Ottawa's 2025 Budget (Part 1)
My 4 top questions for the upcoming city budget
The City of Ottawa budget comes out on November 13, and will be approved on December 11.
Here are my top 4 questions for the 2025 budget.
1. Can anyone even understand this budget?
Some organizations present budgets as if they were something that only a finance professional could understand. That’s baloney. Complexity is just a way to exclude people from budget discussions.
Budgets do not need to be complicated. They can be accessible to everyone.
Governments choose to make financial documents hard to understand when they want to hide something or minimize public scrutiny.
And budgets are one of those things where many people don’t feel qualified to ask for better.
A municipal budget should clearly answer any spending questions that its residents have. I’ve written previously about 12 questions that every city budget should answer.
I’ll be looking to see how many of these 12 questions are answered in Ottawa’s 2025 draft budget. If 2024 is anything to go by, most will not be answered.
2. What is the actual property tax increase?
In large part thanks to previous mayors Larry O’Brien and Jim Watson, Ottawa residents have been trained to think about their city budget in terms of one number: the property tax increase.
O’Brien ran on a “zero means zero” tax increase. (His actual tax increase came in at 14%). Watson kept tax increases to 3% annually, which he characterized as 2% for inflation and 1% for infrastructure.
Sutcliffe has followed in their footsteps. He has defined this and previous City budgets around a single arbitrary number. First 2.5%. Now 2.9%.
The only problem is 2.9% doesn’t mean 2.9%.
In the City’s budget directions, the Mayor indicated there would be a 2.9% property tax increase, plus an increase to the transit levy.
I’ve never seen the City carve out the transit levy from its tax increase number. And for a good reason. Taxpayers pay one monthly property tax charge.
Whether the money is used for citywide services or police or transit or something else, it’s all part of one municipal tax levy that taxpayers pay.
Mark cannot credibly pull out a single item, and say that it is not part of the tax increase. It would be like saying your $3,000 monthly mortgage payment is really only $2,500, because $500 of that payment is to cover the garage rather than the house.
I hope the local media will do its job and push Mark on the real tax increase number.
If he wants to make the budget all about one number, Mark should tell us what that number is.
3. How are we helping residents with affordability?
Sutcliffe says that helping residents with affordability is his top priority.
For him, that means keeping property taxes low. A 2.9% increase means $173 in additional taxes fort the homeowners of a typical Ottawa home valued at $500,000.
Each 1% tax increase amounts to about $5 a month for that family. But every 1% tax increase puts over $20 million into the city budget. That’s a significant amount of money to help families with affordability.
Such as keeping libraries open on Sundays, as Toronto has just done, so that families have no-cost options for how they spend their weekends.
Or whether the city moves forward on the proposal below to put $72 million into the pockets of low-income residents.
Or making transit sufficiently reliable that households could consider going without a second car. The typical car in Canada costs us $16,000 a year — in car payments, insurance, gas, repairs and parking. A bus pass for 12 months costs about $1,500. Providing a reliable transit service that lets families consider swapping an extra car for a bus pass could be the top affordability measure that the City of Ottawa could do for residents in the short term.
4. Are we fixing transit, or are we turning it into a half billion dollar a year white elephant?
Continuing on the theme of transit. Municipalities like Ottawa have a legal responsibility to provide public transit to their residents. We do not have the option to stop providing transit.
The 2024 operational budget for OC Transpo is $768 million. Fares cover $175 million of this. City taxpayers cover $556 million.1
By 2027, the transit operating budget will be over $1 billion.
About 17% of the property taxes you pay go to transit. That family with the $500,000 home is currently paying about $1,000 a year for transit.
So here is the choice that taxpayers face:
1- the City can nickel-and-dime transit to the point where OC Transpo becomes a last-choice option. Like the example below that was described to me a few days ago.
One student’s trip from Beacon Hill to Algonquin College requires 3 buses plus the O-Train. Leaving two hours in advance, they can’t guarantee they’ll get to class on time (for a trip that takes about 20 minutes by car).
This last-choice option is the path we are on now. But it comes at a high price. It turns light rail, which local taxpayers spent $3 billion on, into a white elephant. And we’re spending over half a billion dollars every year on a service that fewer and fewer people will want to use.
2- Or the City can fund transit to the point where OC Transpo is a real option, even the first-choice option. Give people the option to take transit to work and to be one less car on the road.
This option means creating priority lanes for buses. It means solving the LRT woes once and for all. It means spending more on transit than we are currently spending.
In terms of additional funding, there might be new ways to pay for transit. The Mayor and a set of councillors are looking into options for transit financing. Will Mark advocate for any of the nine measures (see below) that he has been asked to consider?
More to come
Early next week, I will release part 2 of What I’m Looking For in Ottawa’s 2025 Budget. That will get more into the specifics of how the City is proposing to spend your tax dollars in 2025.
With the decline in local media, Ottawa needs more than ever independent voices willing to scrutinize the actions and spending decisions of City Hall. That’s what I’m trying to do with the 613. Shine a light on what’s going on at City Hall.
I want to keep these posts freely available to all, because the truth matters. But I can only do that if some of you step forward and become patrons of this newsletter.
You could become a patron by upgrading to a paid subscription. Thanks for considering.
“Recoveries” paid for the remaining $37 million. All these numbers refer to operating costs, not capital investment costs.
Thanks for this, Neil -- all pertinent questions. I confess that the creation of this working group for transit had passed me by. A year later, is there any sign of progress on this? It sure is given a full plate.
I do demur a bit on your comment about the transit levy. It is always carved because not everyone pays it. I could be wrong, but I suspect that all these previous "one number" promises always referred to only the city-wide portion of the tax bill as well. (Other carve-outs are for police, fire, garbage and conservation authorities.)
That does not diminish the critique that the Mayor's aggressive focus on the transit levy as "in question" is deceptive, as if it would not be legitimate to ask whether the $120M deficit could possibly be addressed by shifting priorities in other parts of the Budget (roads, for example).
Very concerning budget. Thankyou.
Sandra