What I'm Looking For in Ottawa's 2025 Budget (Part 3)
Will the City continue to drain its reserves, as it has done for the past 2 years?
I have previously written about my top 4 questions for the 2025 Budget, as well as 4 questions for the capital investment budget. This is my third and final instalment in what I’m looking for in the City’s upcoming 2025 budget.
Are we draining our rainy day reserves?
The City of Ottawa has been draining its reserves since Mark Sutcliffe came to office. At the end of 2022, the City had $567 million in discretionary reserves. By the end of 2024, that is expected to fall to $366 million. I’m watching closely to see what happens in 2025.
Reserves are our “rainy day fund” to make up for unexpected shortfalls in revenue or increases in expenses. City reporting makes it impossible to Councillors or the public to assess whether the individual reserve balances are at the right level or not.
However, the City’s reserves management policy does include the staff recommendation that discretionary reserves amount to no less than 8.5% and no more than 12% of operating expenditures.
The City isn’t particularly transparent on reserves, so I have compiled the table below from Budget information over the years.
As of 2024, the City of Ottawa has fallen below its own staff-recommended minimum level for discretionary resources. We are at a 7.9% balance, when our policy recommends a minimum of 8.5%.
Will the 2025 budget worsen our position or will it seek to recapitalize reserves in order to bring us back up to the minimum required level?
Are “savings” real or imaginary?
This Mayor likes to talk about how much he is saving the taxpayers of Ottawa — that he has already found $153 million in savings that has averted a 7.5% tax increase. This is wrong and misleading.
Either our Mayor doesn’t understand basic financial concepts (one-time savings do not equate to a permanent annual tax increase), or he is continuing to spin a line that Councillors have already corrected him on.
Furthermore, for savings to be real, they need to be returned to the budget process for reallocation to any other department. Departments can’t claim to “save” money and then simply spend it on something else. Ottawa Police Services does this every year. They identify millions in “savings”, and yet their budget magically goes up by the total allowable tax increase.
I’m speaking at Synapcity’s Building a Better Budget event this Wednesday, 13 November at 6pm, with my first impressions of Ottawa’s 2025 budget. Hope you can join me.
One of the major flaws in the City's budgeting process is that no historical data are provided. Thanks for at least doing the calculations on the Reserves three years back. If I recall correctly, the City (under Watson) has gone down the path of exhausting the Reserves before, reducing them to really dangerous levels (so as to keep the 2% promise).
Are the Reserves not the cushion for self-insurance as well? I remember Lorne Cutler warning about the City not setting enough money aside to cover that risk.
Really excited for tomorrow's event! Let's gooo!