Tax hikes or spending cuts? Ottawa city committee to examine $41-million deficit

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Councillors split on whether to boost two-per-cent tax cap, trim services or both in advance of 2016 budget talks.

Lucy Scholey, Metro

It’s the $41-million question Ottawa city councillors are facing: raise taxes or cut spending?

A city staff report that will go before the finance and economic development committee (FEDCO) on Tuesday cites a whopping $41-million deficit by the end of the year. “Higher than seasonal norms of snowfall” are largely to blame for the $17.7-million public works shortfall in the report, but freezing pipes and an unexpected $9.88 million for wage arbitration are also factors in the overall deficit.

The councillors sitting on FEDCO – and Ottawa Mayor Jim Watson, who chairs the committee – will grapple with this question on Tuesday.
Watson campaigned on a two-per-cent tax cap. Councillors Bob Monette and Allan Hubley, who both sit on the committee, are standing firm by that.

“Many of my residents have managed to live within the cost of living levels for years so I do not foresee the need to hike taxes significantly,” said Hubley, who represents Kanata South.

At least three other councillors who don’t sit on the committee – including Rick Chiarelli, Michael Qaqish and Jean Cloutier – agree with keeping taxes low.

River Coun. Riley Brockington said a rate hike should be a last resort. Every few years, city staff should comb through the accounts of a handful of departments, regardless of whether the city is carrying a deficit or a surplus, he said.

“I’m not positive yet that we’ve looked under every stone,” he said.

Kitchissippi Coun. Jeff Leiper said the city should “seriously reconsider” the two-per cent tax cap. Both he and Somerset Coun. Catherine McKenney say they want to see tax-increase comparisons, like how a three-per-cent hike would look next to a 2.5-per-cent hike, for example.

“I’m concerned that we are cutting to the bone,” Leiper said.

Capital Coun. David Chernushenko, who sits on FEDCO, said the city would need to both raise taxes and trim spending to seriously slash the deficit.

“The sooner the better,” he said in an email, “or else the level of tax/rate increase and the severity of cuts will only get worse later in this term.”