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Ottawa Citizen - Nov 10
Patrick Dare, The Ottawa CitizenPublished: Monday, November 10, 2008
There's at least one good thing about the brutal budget exercise that started Nov. 4 at Ottawa City Hall. People are starting to understand that the city's finances -- driven by rapid suburban growth, demand for more government services and sharply rising costs for those services -- are not sustainable.
Not only is the city facing a five-per-cent tax increase this year, plus a barrage of painful cuts totalling $35 million, there's more in store in the years to come and the city is not placed to cope with a dangerous mix of quickly rising costs and much more moderate revenue increases.
"The city is not financially sustainable the way it is going," says Cumberland Councillor Rob Jellett. "And there are no easy solutions."
Building more roads and sewers, not to mention providing services such as transit and libraries to the suburbs carries a high price tag.
Bruno Schlumberger, The Ottawa Citizen
It's not that Ottawa is going bankrupt. The city's debt growth is a modest $20 million this year, with a total outstanding debt of $750 million, an amount that is considered well within the city's financial capability.
But costs are outpacing revenues. To provide the same services in 2009 will cost $57 million more than this year. The city is projecting that for 2010, it will cost a further $56 million to maintain services, to which another $46 million must be added for additional services for growth areas.
A big part of the problem is the nature of the city's growth. Commercial development makes money, but residential does not. Most of the development in Ottawa is residential and most of it is in suburban communities outside the Greenbelt. The city gets new tax-assessment dollars with development growth, but it's only about $20 million a year. The residential communities that are springing up on the outskirts need an array of services: police, fire, paramedics, arenas, soccer fields, parks, ball fields, community centres, roads, transit and recreational pathways.
The pleas for these services and facilities are often urgent: Sometimes families in a new subdivision can't get to work, or safely to school, because of inadequate roads.
It's not just commuters who are feeling the pain. Last week, Chief Rick Larabie of the fire department and his staff explained to a council committee that new fire stations are needed in south Nepean, Orléans and Kanata to ensure that crews make it to calls quickly. The city will spend $15 million on new fire stations in 2009. The chief says the city needs to serve an additional 27,000 households in growth areas by 2031.
While development charges -- fees builders pay on new construction -- often pay for building things like fire stations, the cost of operating them is simply added to the city's annual budget headache. Costs for firefighters, paramedics and police are especially high. The police are seeing a 6.6-per-cent increase in their spending for 2009, in part due to the growth of suburban communities. This year, 175 kilometres of roads were added to the city, roads that now have to be maintained by all taxpayers
"When growth happens, the year it happens, you see this huge cheque coming in. You forget that the bills are also coming in and they are bigger," says College Councillor Rick Chiarelli. "There's no doubt that growth is a big problem. We need to slow down growth."
The fact that Ottawa is one of the geographically biggest cities in Canada -- with 2,700 square kilometres -- does not help. The city sends snowplows to rural roads that are distant from the urban core and must provide emergency services, recreation and library services to thinly populated new communities. While Ottawans love their Greenbelt, it is a costly urban buffer, adding millions of dollars to the annual costs of services such as public transit and the sewer system.
That new communities being built are hard to service is another problem.
Kanata South Councillor Peggy Feltmate says many suburbs are difficult to run buses in, and difficult to clear of snow, because the streets are not laid out in easily navigated grids. Emergency vehicles are also delayed because of the difficulty of getting into neighourhoods and out on spaghetti-like streets, crescents and cul-de-sacs. And it's a lot more costly to provide services to thinly populated neighbourhoods of single-family homes than more densely populated urban neighbourhoods.
Yet, Ms. Feltmate says the demand for public services, and the expectation that they will be there, is strong. People want the same services they see residents in other neighbourhoods enjoying.
While the city may wish to refuse new residential suburban development, especially poorly designed projects, experience in Ottawa shows developers will fight delays and take the issue to the Ontario Municipal Board, if necessary, to get their way. The board can overrule council's planning decisions, and if a piece of land has been approved for development generally, the city is rarely in a strong position to stop particular projects.
Another thing the city is not in a good position to control is labour costs.
Ninety-five per cent of the city's employees are unionized and employees such as firefighters and police have ironclad protections under Ontario law. Their wages and benefits are typically set by provincial arbitrators. Ottawa's firefighters recently won an arbitration decision that added another $6.2 million in costs for the city. That award, which has some councillors shaking their heads, gave experienced firefighters automatic retention bonuses, even though the fire department has applicants beating down its door to join the service.
Councillors know they must find their way out of this financial mess, but aren't sure quite how.
Mr. Chiarelli says the city may be able to get itself on a more solid footing by having a series of budgets over the next few years that bring in tax hikes slightly above the rate of inflation.
He says the city must delay some large capital projects for buildings and facilities in new communities. As well, he says, the city should slow, but not stop, the growth of the urban area, though he admits that concept is "heresy" at City Hall.
Mr. Jellett noted that the financial problems the city is facing are prompting staff cuts -- 230 positions this year to save $14 million. But he said the size of the shortfalls for this year and the next means that reorganization at City Hall can only make a limited contribution to the solution. He fears that if the city simply keeps raising taxes they will become unaffordable for Ottawans.
Mr. Plamondon, who has assisted the city through this budget, says there is no other choice.
"It's more cuts or higher taxes," he says.
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