Will the new Ottawa budget solve OC Transpo’s $120M deficit?

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On Dec. 11, city council will meet to debate and vote on Ottawa’s 2025 budget. The $4.98-billion draft budget calls for a 3.9 per cent property tax increase. More than one-quarter of that increase is to pay for the cost of public transit and OC Transpo’s staggering $120 million operating deficit.

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As for the rest of city services — employee salaries, fixing sidewalks, collecting garbage, plowing roads, buying new police cars and library books, the burgeoning cost of social programs and everything else Ottawa does — that’s going up too, adding 2.9 per cent to the average property tax bill.

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We invited readers to submit their questions about the 2025 budget, some of which we put to Cyril Rogers, Ottawa’s General Manager and Chief Financial Officer, Finance and Corporate Services.

Here are a selection of your questions answered:

1. How much money in the 2025 budget is allocated for costs associated with Lansdowne 2.0?

“The draft 2025 budget includes a $1.3-million budget line item for contribution to the debt reserve fund, which is in line with the funding strategy approved in the November 2023 report to council.”

2. What are the future cost implications of the $383 million in new infrastructure that the 2025 capital budget includes? Are we putting aside sufficient money each year to repair or replace our existing infrastructure?

“Long-range financial plans (LRFPs) are important for good financial planning and fiscal responsibility. These plans are updated at regular intervals to reflect new information such as changed priorities, adjusted pricing, and any new legislated requirements.

“The city’s LRFPs outline the funding strategies for future infrastructure renewal and investments. Substantial progress has been made in funding the infrastructure needs identified in the 2017 LRFP, with full funding anticipated by 2026. Annual allocations are adjusted to reflect annual growth in infrastructure. The city will present updated asset management plans and LRFP funding strategies in 2025.” 

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3. How firmly entrenched is the city’s “draft budget?”

“The draft operating and capital budget was tabled at city council on Wednesday, Nov. 13. Following the city council meeting, standing committees meet between mid-November and early December to consider their portions of draft budget 2025. Each standing committee, transit commission and respective boards (Ottawa Police Service, Ottawa Public Library and Ottawa Public Health) review the draft operating and capital budget for the city’s programs and services under their mandate. Each committee and the transit commission can approve, disapprove or make changes to their respective budgets that then rise to council for review and adoption on Dec. 11.

“The public is encouraged to share their thoughts throughout the draft budget process. Residents, businesses and community groups have opportunities to register as a public delegate at a budget review meeting of any standing committee, participate in councillor-led public consultation sessions and ask questions through the city’s Engage Ottawa webpage.”

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4. How much would taxes and fees need to increase each year to pay 100 per cent of the city’s projected maintenance gaps or shortfalls for all of its asset management plans within 10 years?

“The city outlined funding strategies for future infrastructure renewal and investments in the 2017 LRFPs and has made significant progress to address funding gaps for asset renewal. In 2023, the rate-supported (fees related to specific service areas) funding gap was closed, and the tax-supported (funded through property taxes) funding gap will be realized by 2026.

“Updated asset management plans and LRFP funding strategies will be presented in 2025. Further information on the city’s 2017 funding strategy is available on ottawa.ca.”

5. How much money does the city have in a “rainy day” reserve fund to protect against unexpected cost overruns or revenue shortfalls? 

“The management of reserves is an important factor in the city’s overall financial condition as they influence both financial sustainability and financial flexibility. The city’s management of its reserves is also a key contributor to the city’s strong financial credit rating, AAA and AA+.

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“The city’s reserves remain in a strong financial position. The 2025 projected closing balance of the tax stabilization, city-wide capital and employee benefit reserve remain above the suggested maximum as per the reserve policy. Many of the other reserves are guided by the respective long-range financial plans or other conditions based on source of revenue and use.”

 6. I would like to know how much the city contributes to employee pension plans per year and what are the solvency ratios of the various plans.

“The city contributes to the Ontario Municipal Employee’s Retirement System (OMERS), a multi-employer pension plan, on behalf of most of its employees. Over a five-year average (2018-2023), the city has contributed $134.2 million to employee pension plans.

“OMERS doesn’t have a published solvency rate; they provide their funded rate, which is 97 per cent. The funded ratio is the relationship of a pension plan’s assets to its liabilities.” 

 7. How many people will the city employ in 2025 compared to 2024?

“The draft 2025 budget proposes 17,026.00 full-time equivalent (FTE) staff positions required to deliver all services (including rate-supported) for city operations, the boards and transit commission. In 2024, the city had 16,518.05 budgeted FTEs.

“FTE growth is funded by user fees, rate funding, efficiencies, provincial funding and tax-supported funding. The majority of the tax-funded positions within the organization are required to support growth in front-line services, maintaining council approved programs and to administer provincially legislated mandates.

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“The city is committed to implementing innovative and efficient solutions while maintaining staffing and service levels. Since 2016, the number of households in Ottawa has grown by 17.5 per cent, Ottawa’s population has grown by 16 per cent, while total FTEs have only increased by 12.2 per cent. The city continues to absorb between 3.8 per cent and 5.3 per cent of population and household growth, while maintaining low administrative costs.”

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