Listen to this article
Estimated 5 minutes
The audio version of this article is generated by AI-based technology. Mispronunciations can occur. We are working with our partners to continually review and improve the results.
City of Ottawa staff are floating the idea of charging a new levy on property tax bills to help fill an infrastructure funding gap that has only ballooned since the last time council pledged to fix it.
The idea is mentioned in a new 10-year plan to fund work on aging roads, city buildings and parks, though only as a possible solution for council to consider down the road.
Going back decades, Ottawa hasn’t spent enough to keep up with the need to maintain and repair those assets. That was supposed to change in 2017, the last time council passed a long-term capital plan to catch up with a shortfall that then stood at $70 million per year.
But despite council doubling annual infrastructure funding over the past decade, the gap has only grown — and even doubled by some measures. Construction costs have shot up and project deferrals have left a backlog of needed work.
Over the next 10 years, the city’s planned spending now comes in about $3.8 billion short of the need, just to repair and maintain existing assets. That doesn’t include water and sewer infrastructure, which is funded separately.
The new funding plan only looks at the highest-priority work to maintain assets in “a safe and functional state” — and still finds a shortfall of $1.2 billion, or $120 million per year.
“They do this because of sticker shock,” said Alex Cullen, a former Ottawa city councillor and MPP who has long warned about the backlog of crumbling infrastructure.
“It’s a lot of money to catch up here, to bring the system into good working order, so they’re trying to scale it down.”
Alex Cullen, a former Ottawa city councillor and MPP, holds the staff report detailing the long range financial plan for tax-supported capital. He’s standing in front of the J.A. Dulude Arena, which is now more than 40 years old. (Arthur White-Crummey/CBC)
The need to build more roads and facilities to keep up with a growing population makes the gap even bigger. Factoring in those costs will require raising a total of $143 million per year in extra capital funding, beyond what the city is already planning to spend.
That doesn’t even include the need to keep up with accessibility standards, upgrade infrastructure to better withstand climate change, or even replace aging facilities. That pushes the gap to an annual $229 million.
And the plan only contemplates replacing 40 of those facilities, even though 130 are reaching the end of their useful life.
“They’re taking baby steps when we need to be more ambitious to solve what is a huge financial problem,” said Carolyn Mackenzie, who represents a network of community associations on the city’s planning advisory committee.
Levy idea has come up before
How will the city raise the money?
Staff are proposing to take on hundreds of millions of dollars of debt over the next decade —enough to push slightly past council’s self-imposed limit for annual interest payments, currently 7.5 per cent of revenues. They also want to drain a capital reserve to provide a one-time funding boost of $32 million.
The report also asks council to earmark an extra $6 million from whatever tax increases pass in 2027 and 2028, devoting that money to capital instead of other needs.
After that, the city will need another solution. Starting in 2029, the plan factors in $23 million to $29 million per year from a still-to-be-found source of funding.
One idea on the table has prompted controversy before: an infrastructure levy.
Currently, tax bills include separate levies for police and transit. The money raised can only be used for those services and adds to the overall tax residents pay. Ottawa briefly had such a levy for infrastructure, but it ended in 2009.
While the report does not actually recommend going forward with the idea at this time, it says council will have to “reassess” after the one-time funding boost. It notes that the levy has been used in other cities and could help address the backlog.
It even gives an example: A one per cent tax levy would cost the average urban homeowner $46 per year.
The idea last came up in 2017, when eight city councillors proposed a 0.5 per cent levy that would help narrow the gap.
At the time, the proposal divided council and it was withdrawn after the city found a surprise $10-million surplus.
Cullen, who is also president of the Belltown Community Association, said he’s glad to see the idea of a levy re-emerge, but said city staff seem to be merely setting the table for a future discussion.
That caution doesn’t surprise him, given the timing.
“I think it’s politics. I think it’s the municipal election,” he said. “At least they’re putting it on the table so people can talk about it and judge.”
Voting day is Oct. 26.
“They recognize that they’re dealing with a council that has a habit of raising taxes at the rate of inflation,” Cullen added. “Well, that’s not going to cut it.”