The feds are not shortchanging city government
Ottawa Mayor Mark Sutcliffe is getting strong pushback against his attempt to blame federal and provincial governments for the city's “financial crisis” — and rightly so.
Earlier this month, Sutcliffe torched federal and provincial governments for shortchanging the city by millions of dollars in payment-inlieu of taxes (PILTS) and transit funding. “It is not an exaggeration to say Ottawa is facing a financial crisis, and I want to be clear that it's a crisis that is not of our own making,” Sutcliffe said. “If we don't get some answers from the federal and provincial governments in the next 60 to 90 days, we are going to have to make some very tough decisions.”
But if Ottawa is in a financial crisis, it is largely of the city's making, not the federal government's, which Sutcliffe is bashing. What Sutcliffe is really doing is setting up higher levels of government for the blame if property taxes rise significantly in the 2025 budget.
Council will resume sitting on Sept. 4 after the summer break, with budget discussions topping the fall agenda. Then on Dec. 11, when council meets to approve the budget, we'll know if it has learned anything from regularly setting lower property taxes even as inflation increased the cost of running the city.
For years, city hall stubbornly stuck to lower taxes, while neglecting vital services Ottawa needs in order to thrive. Look at our bad roads and you see the consequences of that neglect. It's not all Sutcliffe's fault, but he shares some of the blame.
Last December, when the council approved a 2.5 per cent tax increase, I wrote a column questioning whether that was sustainable. We all love to pay lower taxes, but I wondered if it would have been better to spread the pain slowly so that down the road, we don't have to gulp down bigger increases, which Sutcliffe is intimating may be inevitable.
Ottawa increased taxes by 2.5 per cent, when inflation was at 3.9 per cent in 2023 and 6.8 the year before. Compare Ottawa with Toronto, which recently increased taxes by 9.5 per cent; Calgary, 7.8 per cent; Edmonton, 8.9 per cent and Vancouver, 7.5 per cent.
Over the 10-year period from 2014 to 2024, the cumulative tax increase in Ottawa was 26.91 per cent. For Toronto, it was 36.47 per cent; Calgary, 39.3; Edmonton, 39.86; and Vancouver, 56.99 per cent. In Ottawa, we pride ourselves on holding taxes below the rate of inflation, oblivious to the long-term consequences. Now the chickens may be coming home to roost.
Sutcliffe's complaint is that the federal government hasn't paid its fair share of PILTS, handing the city $30 million less today than it did eight years ago. According to him, the city is owed about $100 million. Public Services and Procurement Canada (PSPC) records show that Ottawa was paid $122.7 million in 2019; $124.8 million in 2020; $114.6 in 2021; and $119.6 million in 2022. Last year, it was $124 million.
What Ottawa gets from PILTS is no small change, and its financial problem is not because the feds are shortchanging the city. The feds have long had the power to decide the value of their properties and pay PILTS accordingly.
If the city feels it has been shortchanged, it should seek redress from a panel that exists for that purpose.
If it hasn't done so, that says a lot. The reality of the city's financial crisis is largely because it has made bad choices on how it spends money, and has poorly managed some of the big projects, including LRT, that have ended up costing more money.
Yes, the federal and provincial governments can certainly do more for the city, especially helping OC Transpo out of its $140-million annual deficit, and hopefully that will happen soon. But on the big picture, Sutcliffe and council must look in the mirror, because the real culprit may be staring right back at them.
The reality of the city's
... crisis is largely because it has made bad choices.