Letter from City Manager

November 13, 2002

Dear Mayor and Members of Council,

The Senior Management Team is pleased to present to you and Ottawa residents the City's 2003 draft budget estimates. These estimates are outlined in three documents: the 2003 Draft Budget Overview (summarizing the entire program and outlining the impact on residents), the 2003 Draft Operating Budget (organized by City department and branch with business plans, operating budget estimates and resource requirements down to the program level, and providing variance analyses among the 2002 forecasts, 2002 budget and 2003 estimates and amalgamation savings summaries by department) and the 2003 Draft Capital Budget and Four-Year Forecast (organized by the Standing Committee that will consider the projects and including the active capital works-in-progress list).

The 2003 draft budget is the third for the new City of Ottawa in just 20 months. Developed by City staff from the guidelines set by Council, it continues to pass on the direct benefits of amalgamation savings to Ottawa taxpayers by maintaining the 10 per cent tax rate cut instituted by this Council in 2001. As a result, when adjusted for inflation, the average urban property taxpayer now pays 20.5 per cent less in property taxes than in 1993, while the average rural property taxpayer pays 21.9 per cent less.

Ottawa's Long-Range Financial Plan: First Steps (LRFP) and the LRFP subcommittee report, both tabled in October, identified the major pressures and challenges facing our city as we plan for our future and examined the best ways to manage growth, maintain our infrastructure and continue to provide the high quality services residents value and enjoy. These challenges are faced by all cities in Canada. Although cities are recognized as the stewards of our urban resources - investing more than $46 billion in physical and social infrastructure in 2001, economic and policy experts agree that they simply do not have the tools needed to adequately fund the services they must provide.

The Organisation for Economic Co-operation and Development (OECD) summarized the situation Ottawa and its sister municipalities are experiencing in its 2002 Territorial Review of Canada, stating that: "…compared to other countries and especially other OECD federal countries, Canadian municipal governments have relatively weak powers and low resources. In the last decade, the on-going process of decentralization, which is leading the federal government to download programmes and expenditures onto the provinces, has worsened the situation for the cities. The provinces, in turn, delegated responsibilities to the municipalities, which resulted in the assignment of unfunded mandates. Municipalities ended up having increased responsibilities without their resources being proportionally extended."

The importance of this issue to the national agenda cannot be overstated. Cities are the country's economic engines, and current legislative and funding arrangements must change if Canada is to succeed in the global economy. The OECD recently added its voice to the dialogue outlined in the LRFP when its 2002 Territorial Review of Canada concluded that, "[T]here is a need for more vertical collaboration and federal/provincial/local partnerships, in particular to support the development of large cities that already account for a dominant share of regional GDP and will be of overwhelming importance for future regional growth and employment."

The City of Ottawa does not feel it can or should wait for the federal and provincial governments to begin to deal with the fiscal challenges facing their cities. It is imperative we continue to do our part to manage growth by building on our successes with efficiencies and streamlining. The LRFP established a number of policies and principles that will help, including ensuring the capital program receives a fair share of new assessment growth, establishing a minimum balance for reserve funds, reducing the capital envelope, looking at possible capital-standard adjustments, establishing a program review process, investigating public-private partnerships, establishing a revenue policy for fees and rates, and setting specific criteria for long-term debt financing.

The City's administration has been able to achieve Council's directives in the 2003 budget by continuing to implement as many organizational efficiencies as possible, and by using provisions to take advantage of partnership funding. It has incorporated many of the options listed in the LRFP, including: achieving a five to ten per cent reduction in the capital envelope, totaling $530 million over 5 years; projecting a $53 million balance in the tax-supported reserve funds; investigating a public-private partnership for the new Emergency Medical Services headquarters; recommending changes to some capital and program service standards; and proposing some changes to user fees.

The next steps for the City of Ottawa will include an asset management review for transportation, water and wastewater infrastructure, and a final version of the City's Official Plan. A second phase of the LRFP will be developed based on this information and the results of the City's other growth plans (the human services plan, the arts and heritage plan, the economic plan, and the corporate strategic plan). This second report will provide a more detailed 10-year forecast that will be submitted to Council in late 2003, along with the 2004 draft budget estimates.

Investing taxpayers' money wisely and well are among the most important responsibilities of every government. We believe these draft estimates meet those criteria. But we raise the caution that Ottawa, like all cities in Canada, won't be able to reach its full potential without long-term stable funding from the federal and provincial governments.

We believe our residents should be able to enjoy the results of the efficiencies their city government delivers. We believe it is reasonable to expect that that they should reap the benefits of their investment in the infrastructure that drives the national economy. The administration looks forward to continuing to work with you to achieve these goals and implement your vision as we work together to improve the quality of life for the citizens of Ottawa.

Sincerely,

Bruce E. Thom, Q.C.
City Manager