Why is it that no matter the level of government, no matter the party in power, or the city council of the day, the budget process always seems like a shell game.
In the case of the City of Ottawa, I have witnessed and covered more than 23 budgets and every time it’s the same process – the mayor sets a tax increase target based on what he feels the electorate will grudgingly accept and then staff goes about formulating the budget while trying to keep as many councillors as happy as possible.
Take this year’s budget for example. Coming into the budget we were told that the city is facing some serious financial challenges, the biggest, of course, being the state of our transit service. Ridership took a tremendous hit during the pandemic, resulting in a massive loss in revenue that was only partially offset by service reductions. Most of those losses were covered by federal and provincial grants.
The city received $52 million from the province and feds in 2022 alone, Unfortunately, the loss in ridership revenue was close to $82 million. The difference was covered by a contribution from OC Transpo’s reserve fund.
OC Transpo is expecting a further loss in revenue of $53 million in 2023. It is hoping the feds and the province will pony up another $39 million. I say “hoping” because the provincial and federal governments have made no commitments as of yet. In order to make up the difference between their projected losses and the money they are hoping to get, the bean-counters at OC Transpo have elected to reduce the contributions to the capital reserve fund and increase the subsidy from ratepayers. This is why I refer to it as a shell game. They just rearrange a few deck chairs and if there aren’t enough deck chairs to go around, they just go below and get some more. Voila!
I always love how people compare running the city to running your own household. But there is no comparison. If you’ve already maxed out your line of credit and you need money to fix a leaky roof, you’re out of luck. Chances are you don’t have a reserve/slush fund that you can simply take money from to cover the cost of the repairs and you also just can’t arbitrarily raise your pay, like a city can raise taxes or user fees.
The city cries poor every year and every year they set a reasonably low tax increase and somehow still manage to balance the budget. It’s one of the best unexplained magic acts around and it will be no different in 2023. And the City’s financial gurus get away with it because A) the city councillors are terrified of upsetting their constituents if the tax increase is too high and B) most have no financial acumen of their own. In fact, I’ve always said that city council candidates should have to take a math competency test before putting their name on the ballot, and even then they should have to share their score. Now, wouldn’t that be interesting?