Taxpayers on "Budget 'Owe' train" headed over cliff
City mismanaged, then misled ratepayers- using reserves to fake cuts


 

Deans outflanks Chiarelli on budget

Councillor steps in to fill leadership void

Randall Denley
The Ottawa Citizen

Thursday, February 10, 2005

There are two key problems at Ottawa City Hall. One is spending, the other leadership. The first won't be solved until the second is.

Citizens, and councillors, naturally look to the mayor to provide leadership. Mayor Bob Chiarelli rather spectacularly failed to do so during this year's budget. He settled on a tax increase target his political instincts should have told him was too high, stuck with it, and then had the rug pulled out from under him at the last minute. Worse, one of the people pulling the rug was potential mayoral rival Councillor Diane Deans.

 
 
There are two key problems at Ottawa City Hall. One is spending, the other leadership. The first won't be solved until the second is.

 
 

How did the mayor allow himself to get out-politicked? Mostly, it was a failure to adapt to changing circumstances, to forge coalitions of the willing. These used to be the mayor's strengths.

Late in the fifth day of budget talks, it became apparent the mayor might not have the votes to pass the budget he had consistently endorsed throughout the debate. How do you get to that point in the last hour of the last day of a budget process that began months ago?

Had council failed to pass a budget, it would have been a stunning embarrassment. Just the sort of problem one would expect an adept mayor to avoid by reaching a compromise.

However, it wasn't the mayor who found a way out. Deans says she approached the mayor and told him she wouldn't support a tax increase of almost 4.5 per cent. It was simply too high. She got together with Councillor Michel Bellemare, who felt the same way, and they crafted their compromise, using a harmless reduction in capital spending, and a higher efficiency target for staff, to get the tax increase just under four per cent.

For Deans, it was a sweet moment. Last week, she had floated the idea of staff finding more savings without cutting services, and the mayor had rewarded her with a sound tongue lashing. Now, he was compelled to buy into her plan. What choice did he have?

A failed budget would be "a vote of non-confidence in the leadership," Deans says. "I'm sure he's not thrilled about it, but it was a good compromise."

Bellemare says "I would have thought that the mayor would have taken a lead role in trying to reduce the tax increase, but it didn't happen and that's why there was this flurry of activity."

 
 
...It would not be alarmist to say the city faces a spending crisis.

...The spending problem is a tough one, far tougher than building a light-rail system.

...Maybe the mayor just doesn't care how much you pay in taxes, but if so, why is he still doing the job?

 
 

Bellemare found himself in the driver's seat, because the mayor was counting on his vote to pass the budget. Without Bellemare's vote, the budget would have failed on a tie.

Chiarelli spokesman John Crupi says the higher budget number would have passed 12-10, but the mayor wanted a stronger consensus. The 3.9 per cent motion passed 13-9, not a dramatic numerical improvement. What's more, the mayor and his helpers did the convincing to get the vote for 3.9, Crupi says.

Despite the effort by the mayor to take credit, it's Deans who gets the political points. She's trying to position herself as tough on spending. There are still a few wrinkles to iron out. Her original call for a no-tax-increase budget, followed by support for more spending, seems contradictory.

More power to her, though. She and Bellemare stepped up when others didn't. This year's budget shows the public will have to find its leadership in different places.

Maybe the mayor just doesn't care how much you pay in taxes, but if so, why is he still doing the job? The budget is the single most important thing councillors deal with. If he can't turn his attention to spending, he will continue to be pushed aside, just as he was this week.

It would not be alarmist to say the city faces a spending crisis. The city has not reached a position of stability, where a tax increase you and I might find reasonable is enough to sustain operations. And next year, we will be going in the wrong direction. We are facing a 9.1-per-cent increase in 2006. You won't find anyone at City Hall who can tell you today how that might be brought down to the level of inflation.

The city has maxed out its revenue. The new money it has been getting from the federal and provincial governments is meant to be used mostly for transit, and no one seriously thinks property tax increases beyond the rate of inflation are sustainable. The conclusion is obvious. If you can't cover your cost pressure with new revenue, you have to cut costs. There aren't any other options.

The spending problem is a tough one, far tougher than building a light-rail system. That's fun by comparison. Bringing city spending into line with revenues will take hard work, and it has to start now. The mayor should get in the game, if he's going to stay in the game.

Contact Randall Denley at 596-3756 or by e-mail, rdenley@thecitizen.canwest.com

© The Ottawa Citizen 2005


Guest Column:

City budget shows council's failures

Brian McGarry
The Ottawa Citizen

Wednesday, February 09, 2005

The book has been closed on the 2005 City of Ottawa budget, and residential taxpayers will see their property-tax burden bill increase by 3.9 per cent while business owners will experience an even higher increase. I am disappointed with the result.

If the new City of Ottawa, and the former regional government between 1997 and 2000, had not given into political expediency by passing unsustainable zero-increase budgets for almost a decade, the 2004 and 2005 budget fiascos could have been avoided. Last year, at 2.9 per cent (actually 9.4 per cent for many), and this year at 3.9 per cent represent tax increases well over the rate of inflation.

 
 
The bottom line for 2006 amounts to a tax increase double the rate of 2005.

...The majority vote at city council reflects the notion of using your credit card to buy groceries while the roof is falling in.

 
 

The prospects for 2006 and beyond are bleaker, with another round of assessment valuations kicking in and several key infrastructure initiatives that remain unfunded or underfunded. The bottom line for 2006 amounts to a tax increase double the rate of 2005. Smoke and mirrors (Councillor Jan Harder is correct in this definition) may kick in again with 2006 an election year but no matter, the day of reckoning is coming.

Well-off individuals in our community may stomach and pay for these tax increases with little or no financial sacrifice. However the reality of a tax hike is much more troubling for new homeowners, fixed-income individuals and of course, our over-worked and over-taxed middle class. The majority vote at city council reflects the notion of using your credit card to buy groceries while the roof is falling in.

 
 
...If the city had gradually kept tax rates in line with inflation since its inception, then our reserve funds would not have been squandered to the tune of more than $250 million, and the siege mentality that grips City Hall each budget cycle would not exist.

 
 

I served for nine years (1985 to 1994) on the Ottawa Board of Education and for three years (1994 to 1997) on regional council. In those years, there were some fractious and difficult budget discussions. I do not envy the challenge with which the present city council was charged. However, if the city had gradually kept tax rates in line with inflation since its inception, then our reserve funds would not have been squandered to the tune of more than $250 million, and the siege mentality that grips City Hall each budget cycle would not exist.

Bus routes would not have been cut, garbage pickup for businesses would not have been abandoned, leaf and yard waste collection would have continued and dangerously delayed infrastructure projects (arenas, community centres, road repairs, water main and sewer system upgrades) would not have made headlines.

Since the amalgamation that was ordered by the former provincial government, financial transparency and financial discipline have become options at city council. Such conduct in the business world gave us Enron and WorldCom; however, many at City Hall have barely raised an eyebrow and much has gone unnoticed by the citizens of Ottawa.

The mayor must set the context of the budget discussions and lead by example to ensure that the rest of council makes decisions in the interests, first, of the corporate body that is the city, with parochial ward concerns finishing a distant second. This has not happened. Instead, costs and wish lists are established and then council looks for the income. There is little understanding of the need to establish priorities and revenue, then trimming sails accordingly.

 
 
Citizens must demand a higher standard of excellence and accountability from council as a whole.

...Since the amalgamation that was ordered by the former provincial government, financial transparency and financial discipline have become options at city council. Such conduct in the business world gave us Enron and WorldCom; however, many at City Hall have barely raised an eyebrow and much has gone unnoticed by the citizens of Ottawa.

 
 

Clear direction must be given to city staff in preparing budget discussion documents. Council must insist that an annual justification of all major programs be undertaken.

A budget analysis should consist of quantitative and qualitative measurements: actuals versus projected costs, reviewed on a quarterly basis; service outcomes versus baseline expectations. Regrettably, no such indicators are provided to council. The ability for council to make basic management decisions is diluted at best and non-existent at worst.

Taxpayers must also play their part and help define what core services are, and what are "the nice to haves." A $5-million footbridge over the Rideau Canal comes to mind as a "nice to have" when we already have four bridges with pedestrian accommodation in the area.

Citizens must demand a higher standard of excellence and accountability from council as a whole. Each time council gets mired in decisions over two or four full-time employees in this program or that service, we must collectively remind it that decisions on these trivial numbers are best left to a professional public service.

As taxpayers we must insist that council stay focused on big-picture policy-based governance that is about bringing new jobs to this city, diversifying our business mix, ensuring safe (and plowed) streets, protecting parkland and working with other orders of government and public and private sector partners to ensure that our quality of life and business climates rank at the top of the heap, not only in Canadian comparisons but by international standards as well.

Brian McGarry is the CEO of Hulse, Playfair & McGarry and
 a former school board trustee and chair and regional councillor.

© The Ottawa Citizen 2005


Letter to Editor:

Yielding to special interests

The Ottawa Citizen
February 9, 2005

On behalf of all of the burr-under-the-saddle over-taxed residents of Ottawa, I’d like to suggest Ottawa council and Mayor Bob Chiarelli get off their high horse.

For the third year in a row our property taxes are being increased to “keep up basic services.” Would those essential services include water, sewer, fire, ambulance, snow plowing or police? No way! A $5 million pub-crawl pedestrian bridge across the Rideau Canal for university students too lazy to walk farther, $6 million for a concert hall, thousands of tax dollars for consultants, thousands for rural bus service for four people per trip and an “Owe” train are “essential services” for this council.

 
 
The council and its mayor are dysfunctional and not fit to govern. Just wait till next year’s possible 12-per-cent tax hike.

 
 

The message from taxpayers has been “No to a tax hike.” However, like whining four-year-olds, special interests showed up, jumped up and down, held their breath and demanded more of our money. And true to form, Ottawa council gave our money away.

The council and its mayor are dysfunctional and not fit to govern. Just wait till next year’s possible 12-per-cent tax hike. Perhaps a gondola service on the canal or more busses through Manotick (given the overcrowding on the current bus service) will be more essential services that this council could spearhead.

Peter Nikic,
Ottawa


Letter to Editor:

More taxes for less service?

The Ottawa Citizen
February 4, 2005

As a co-owner of a home, I protest the projected increase in my property-tax bill. It was bad enough in the recent past to be required to pay the same amount every year while municipal services to property owners began to decline (in effect, there was a decade-long series of property-tax increases).

 
 
Council needs to adopt a measure that will restrict property-tax increases to the current rate of inflation. They still have time to do this for 2005. If councillors make the right choice, some of them just might keep their jobs after November, 2006.

 
 

Now, with municipal services continuing to slide, city council wants to add insult to injury by adding a further 4.5 per cent to my household's yearly tax bill. For what? Why should my household be penalized for the mistakes made during Budget Blunder 2005?

Council needs to adopt a measure that will restrict property-tax increases to the current rate of inflation. They still have time to do this for 2005. If councillors make the right choice, some of them just might keep their jobs after November, 2006.

John Blatherwick,
Ottawa

© The Ottawa Citizen 2005


 

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