In a departure from the norm, the first Ottawa City Council meeting since breaking for the summer on July 10 began with Mayor Mark Sutcliffe criticizing the federal government for not contributing its fair share of taxes through the Payment in Lieu of Taxes (PILT) system. The mayor also stated that OC Transpo has a ridership shortfall because federal public servants have yet to return to the office full-time and because “Ottawa does not get the same deal as other cities do when it comes to transit.” Sutcliffe reiterated from his August 8 ‘Fairness for Ottawa’ press conference that various levels of government fund transit projects in Toronto, Hamilton, and Mississauga. In contrast, Ottawa has to pick up “more than half of the capital costs.” The mayor closed his remarks by imploring the Council to be united in a call for fairness to other levels of government.
City Manager Wendy Stephanson briefed the Council on the state of city finances. Ottawa’s top bureaucrat began her remarks by stating, “Council and staff have done their homework, and the city has managed and continues to manage its finances effectively.” Cyril Rogers, Chief Financial Officer and City Treasurer, echoed Stephanson’s point that the city is financially prudent with a AAA Moody rating.
City staff addressed OC Transpo’s budget shortfalls, projected at $140 million over the next five years, and noted that the shortfall will not stop until 2029 unless revenues are increased or operating costs decreased. Staff then pivoted to the cost of stage two of the LRT Confederation Line, initially projected to cost $ 5.2 billion and now sits at $7.1 billion. The difference, one-third of the initial cost plus any incurred operating costs for the LRT, means that the city is now on the hook for $3.5 billion, significantly more than the $1.6 billion originally budgeted. Staff then stated that the province owns and funds other LRT projects in Ontario.
Another concerning statistic revealed was that OC Transpo anticipates ridership will not return to pre-pandemic levels until 2030. Fare revenue is currently $52 million lower than in 2019 and $108.6 million lower than needed for an “affordable model” that keeps up with revenue. The city report mentioned that $35 million of this deficit comes from public servants not returning to the office. However, it fails to mention the abysmal on-time performance rates of OC Transpo services, which members of the city Transit Commission, most notably Councillor Riley Brockington, have been hammering transit boss Renee Amilcar on for well over a year.
City staff moved to address PILT revenues downfalls, stating that the federal government has had a shortfall of $99.2 million in the past five years compared to what the city invoiced for. However, it should be noted that PILTS are given in lieu of property taxes, and the federal government constitutionally does not have to pay property taxes to lower levels of government as per the Charter of Rights and Freedoms.
City staff pointed out that one of the reasons the federal government can reduce PILTs is if a building falls into disrepair and hence has a loss in value, thus reducing the value of the property and, therefore, the value of the PILT for that property. With nearly 1000 federal public buildings in the city for which the federal government pays PILTs, the revenue lost is substantive, between $45 million and $90 million in the next ten years.
After the grim presentation, Councillor Laura Dudas, a noted Watsonite, and Jeff Lieper, a known progressive, brought forward a motion for the Council to endorse the ‘Fairness for the Ottawa’ campaign started by the mayor and directed the mayor and city manager to continue engaging with the province and federal governments in order for the City of Ottawa gets its “fair share.”
Councilor Matt Luloff asked city staff how much property taxes would have to be raised to make up for the shortfalls from PILTs, and they responded that it would require a 5 percent increase to make up for the currently lost revenues. Luloff called this “shocking.”
Councillor Shawn Menard asked staff if there were plans for more transit service cuts in 2025. City staff gave an indefinite answer, which left the impression that cuts are on the table. Menard also asked transit boss Renee Amilcar how to get more riders to take transit. Amilcar responded that OC Transpo had a thorough action plan to have 99.5 percent service delivery to attract more customers and said there would be good news regarding those metrics at the next transit commission meeting. Menard was seemingly unphased by Amilcar, responding, “I think if we’re going to get more people to take the train and the bus, there needs to be more focus on more than just that one piece.”
Councillor Riley Brockington thanked staff for a “concrete presentation” and suggested sending the presentation and a meeting clip to every MPP and MP in the Ottawa area. Brockington pointed out that representatives in higher levels of government will have to advocate for the city when they meet with federal and provincial leaders. Brockington stated he supported the ‘Fairness for the Ottawa’ motion but reiterated that OC Transpo service reliability remained a primary concern for him, saying, “We have our own challenges that we have to face in addition to revenue” and “service reliability continues to be that major issue in my ward and across the city.”
Councillor Kathy Curry addressed comments by MP Jenna Sudds, who said that the city needed to do its homework regarding its financial issues. Sudds implied that the city should increase taxes to make up the difference. Curry pointed out that the city is not receiving its PILTs in their totality, that residents voted against property tax raises in the last election, and “that actually means something.”
Remarkably, the Dudas-Lieper motion was passed with 24 votes, achieving unanimity due to Councillor Hubley’s absence.
Council is scheduled to meet again On Wednesday, September 18, at 10:00 a.m.
