Appeal to province, service cuts are options in 2008 budget process
If the $118 million in “budget pressures” that the city faces in 2008 were placed onto property taxes, it would mean an instant tax increase of 12 per cent for Ottawans.
So says city treasurer Mirian Simulik, who calls staff’s preliminary estimates of the issues driving city finances next year “a worst case scenario,” but who still expects the final tallies to hit close to that mark.
“This is a rough draft and a lot of decisions still have to be made,” she said during a meeting yesterday to begin sketching out Ottawa’s financial plan for coming years.
What staff and councillors call “budget pressures” — essentially unfunded expenses — include increased employee compensation at $30 million, rising energy costs that come with a price tag of $8 million, and inflation-related items pegged at $12 million, for example.
As well, newly approved projects such as an organics waste program ($11M) and a graffiti management strategy ($2M) will be on the books for 2008.
A decision by council to take $31 million from reserves to achieve a tax freeze budget this year is one of the more expensive items.
“This is something that needs to be addressed by council if we are to reach financial sustainability,” said Simulik, referring to spending reserves.
While the figure is daunting, there are opportunities to trim the projected increase. Using surpluses and pressuring the province to “upload” services such as the Ontario Disability Support Program (ODSP) — which costs Ottawa $55 million annually — are options, according to Simulik.
Other revenue streams such as provincial gas tax and tax reserves are possibilities.
Mayor Larry O’Brien believes one way to tackle the problem is by re-evaluating how the city does its budget and produce different ideas on how to bridge financial gaps.
Despite some councillors’ concerns with the mayor’s “zero-means zero” tax promise, O’Brien is convinced council can make the changes.
“We have an obligation not to give up and eventually we’ll break through the barriers,” he said.
Councillors agree that the pressures will decrease as the budget process begins, but concede there are tough decisions ahead, including service cuts.
“We knew this was coming,” Coun. Rob Jellett said. “But there are ways to change it.”
Jellett is optimistic that the province is prepared to help municipalities. He also wants to see council set a policy that limits taxes to the rate of inflation.