City wrestles with 3% tax cap as budget pressure builds

City staff are preparing a 2020 budget that will again cap the property tax increase at three per cent, but to achieve that some departments will have to cinch their belts tighter than others

If the roadmap drawn up by deputy city treasurer Isabelle Jasminis endorsed by city council, the average urban homeowner will pay an extra $109 next year, for an average tax bill of $3,672.

While that's in line with themayor's re-election pledge to keep the annual tax increase below three per cent,the transit levy would rise by 6.4per cent in 2020, up from 3.5 per cent this year. That's to help offset a loss in provincial gas tax revenue, the transition to LRT, increasingfuel costs and various contract settlements.

Most city departments, including Ottawa Public Health and the Ottawa Public Library, will be asked to limit any spending increases to two per cent.

The Ottawa Police Service, which often struggles to stay withinthe tax cap, is again being asked to manage with a three per cent rise.

A budget under pressure

Municipalities across Ontario have been eyeing 2020 with trepidation ever since thePC government unveiled itsfirst budget in April 2019. Itincluded cuts to everything from paramedics and public health to conservation authorities.

Under pressure from municipalities, which had already passed their 2019 budgets, Premier Doug Ford later changed course and decided to postpone the cutsfor a year.

In Ottawa, the treasurer's office hascalculated the cuts will cost the city$13.8 million in 2020.

The city is being asked to pay a greater share of the costofboth children's services and public health, amounting to $6.3 million each. Meanwhile, a separate long-term care fund has been cancelled, leading to a loss of another$1.2 million.

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The city was also counting on getting twice the revenuefrom Ontario gas taxes next year, but the PCs decided not to uphold that Liberal promise.

Gas tax shuffle

An extra$19million in federal gas tax moneyin each of the next three years is expected tosoften theblow for Ottawa.

City staff are now proposing spending that money onroads, bridges and cycling infrastructure, while money previously set aside for those projects will now go toward transit, replacing thelost provincial gas tax revenue.

"You're taking money from one fund to another. It's perfectly legitimate to do that,"Mayor Jim Watson said Tuesday.

"It allows us to make up the gap that we need for Phase 2 [of light rail construction], and at the same time keep up the aggressive paving work on some streetsthat are in really, really rough shape."

The average water bill is expected to increase by 5.2 per cent next year. That pays for drinking water, sewers and culverts.

Departmental draft budgets are to be tabled Nov.6.