Today, August 9, 2024, I wrote to Paul Calandra, Ontario Minister of Municipal Affairs and Housing, and Sean Fraser, Federal Minister of Housing, Infrastructure and Communities, in support of Mayor Mark Sutcliffe's request yesterday, August 8, for increased financial support for the City of Ottawa.
August 9, 2024
Dear Ministers Calandra and Fraser:
I am writing to you both in support of the Mayor of Ottawa’s recent request to increase financial support for our municipality. As the nation's capital and Ontario's second-largest city, Ottawa faces unique challenges that require immediate attention and investment from both the provincial and federal governments.
Ottawa's Unique Position and Challenges
Ottawa spans an area larger than Vancouver, Calgary, Edmonton, Montreal, and Toronto combined, encompassing urban, suburban, and rural regions. This vast and diverse territory creates complex transit and infrastructure needs. As the seat of the federal government, Ottawa also bears additional responsibilities in supporting national operations and hosting millions of visitors annually.
Despite these unique circumstances, Ottawa has not received equitable funding compared to other major cities in Ontario. This disparity has led to significant financial strain on our municipality and its residents.
Critical Areas Requiring Immediate Support
1. Public Transit Funding
Ottawa's transit system is facing a crisis. We are grappling with a $9 billion shortfall in our long-range financial plan for transit, with an annual operating deficit of $140 million projected until 2028. This situation has been exacerbated by:
a) Inequitable funding models: Unlike Toronto, Hamilton, and other GTA municipalities where transit projects are fully funded by higher levels of government, Ottawa has been required to cover 56 percent of the costs for major projects like Stage 2 of our Light Rail Transit (LRT).
b) Pandemic-related ridership declines: The shift to remote work, particularly among federal employees, has led to a significant decrease in transit use, resulting in substantial revenue losses.
To address these challenges, we respectfully request:
- Reinstatement of the one-third funding model for transit infrastructure, where each level of government contributes equally.
- Allocation of $65 million per year for the next three years to help cover our operating shortfall and maintain current service levels.
- Long-term commitment to sustainable funding that recognizes Ottawa's unique geographic and demographic needs.
2. Payments in Lieu of Taxes (PILTs)
As the seat of the federal government, Ottawa hosts a significant number of federally-owned properties that are exempt from traditional municipal property taxes. While the federal government provides Payments in Lieu of Taxes (PILTs), recent years have seen a concerning decline in these contributions:
- PILT payments have decreased from $194 million in 2016 to $164 million today.
- Over the past five years, this reduction has resulted in an estimated shortfall of $99.2 million.
- Moving forward, a fair contribution would involve approximately $445 million over the next 10 years, or about $44.5 million annually.
To address this issue, we urge the federal government to:
- Pay the $100 million in unpaid PILTs from the past five years.
- Guarantee fair and stable PILT payments for the next 10 years.
- Review and adjust the PILT system to ensure it accurately reflects the costs of municipal services provided to federal properties.
The Impact on Ottawa Residents
The current funding disparities place an unfair burden on Ottawa's residents. Our citizens are effectively subsidizing transit projects in other cities while facing potential tax increases or service cuts to maintain our own system. For instance:
- Ottawa residents have contributed approximately $5,250 each toward Toronto transit projects through their provincial taxes, while only $285 has been contributed to projects in Ottawa.
The shortfall in PILT payments forces local taxpayers to cover the cost of services provided to federal properties, leading to higher property taxes, or reduced municipal services.
The Need for Immediate Action
Ottawa stands at a critical juncture. Without swift action and support from both the provincial and federal governments, the City faces the prospect of significant tax and fare increases, as well as severe service cuts in our 2025 budget. These measures would negatively impact the quality of life for our residents and the operational viability of businesses that rely on our transit system and municipal services.
A Call for Fairness and Partnership
The Mayor and Ottawa City Council are not asking for special treatment, but for equitable support that recognizes Ottawa's unique position and challenges. As the nation's capital and a major Ontario city, Ottawa's success is integral to the prosperity of both the province and the country.
We call upon both of you, Minister Calandra and Minister Fraser, to work together with the City of Ottawa to address these pressing issues. Your leadership and commitment to fair funding can make a transformative difference in ensuring Ottawa remains a world-class capital city that all Canadians can be proud of.
I would also ask you both to give serious consideration for a new national “Municipal Growth Framework” to help municipalities across the province and country address these continuing challenges. This summer, the Federation of Canadian Municipalities called upon the federal government to develop a new municipal growth framework that would enable better public transport, ensure more affordable housing, and provide more green spaces. FCM has urged the federal government to initiate discussions to create a fair and predictable municipal growth framework by the next federal Fall Economic Statement.
FCM underscores the necessity of linking federal transfers to economic growth by indexing them to Canada's GDP and increasing annual municipal transfers by $2.6 billion. This would complement the existing Canada Community-Building Fund, bringing total annual federal transfers to $5 billion. Other recommendations included a cost-matching agreement with provinces and territories and the flexibility for municipalities to use federal funds for both operating and capital costs. Both FCM and the Big City Mayors' Caucus have stressed the importance of a unified approach, noting that cities receive only 8 to 10 cents for every tax dollar, despite providing at least 60 per cent of all essential services and infrastructure. Due to the incredible challenges confronting Ottawa and other Canadian cities, we require immediate action through the provision of enhanced financial support.
Thank you for your attention to these critical issues and for your previous and continued financial support. The City of Ottawa is appreciative of the New Deal for Ottawa which was ratified by the Government of Ontario in March and is projected to provide up to $543 million in operating and capital funding to fuel Ottawa’s post-pandemic economic recovery and accelerate the revitalization of the downtown core.
The City of Ottawa is also appreciative of the agreement that it signed with the Government of Canada in February to fast-track more than 4,400 housing units over the next three years. The federal funding is designed to spur the construction of 32,600 homes over the next decade. Under the Housing Accelerator Fund, the federal government will provide the City of Ottawa with more than $176.3 million.
The City looks forward to continuing this positive trajectory of investment from senior levels of government and awaits your positive response and collaboration on a fair and sustainable funding approach for Ottawa into the future.
Sincerely,
Rawlson King,
Councillor, Rideau-Rockcliffe Ward 13
