Every year, the City of Ottawa produces a municipal budget. One of the City’s most important documents, the budget is the blueprint that defines how resources are collected and allocated. The overall budget comprises two main components – the Operating Budget and the Capital Budget.
Every City program and service is funded through the City’s operating budget, which is designed to ensure the dependable delivery of a broad array of programs and services that residents rely on every day. Your municipal government is responsible for emergency services (fire, police and paramedics), roads, clean water, parks and recreation, public health programs, garbage and recycling programs, libraries and the buses that take residents to work and home. The Operating Budget funds all this and much more.
To keep Ottawa both affordable and prosperous, City staff needs to determine how best to deliver all these services while balancing revenues and expenditures. Given Ottawa’s size, that’s not as simple as it might sound.
Ottawa is one of the largest cities in Canada – larger than the areas of Toronto, Montreal, Vancouver, Calgary and Edmonton combined. Ottawa covers an area of 2,760 square kilometres. Only 10 per cent of that is urban while the remaining 90 per cent is agricultural land, villages, marginal and forested lands, and wetlands. Given the sheer scale of the city, it’s no wonder that a majority of City funds are spent on delivering existing services, many of which are available 24 hours a day, 7 days a week.
In order to progress and grow, Ottawa must also look beyond simply providing existing services. A City needs to be guided by a clear and overarching vision of what it is to become.
City infrastructure is funded through the Capital Budget. The bulk of that funding goes to maintaining and rehabilitating existing infrastructure as identified in the Comprehensive Asset Management analysis. As funding allows, the City continues to fund growth, building new infrastructure and investing in the future. The City adds between $600 million and $800 million worth of new capital to Ottawa’s existing asset base every year – from buses and vehicles to water pipes, , roads to trunk sewers, from street lighting to libraries. These are investments that residents and businesses will benefit from for years to come and which contribute to the growth of Ottawa’s economy and quality of life.
The Capital budget also funds Council’s Strategic Initiatives, which support the Term of Council Priorities.
Developing the budget
With direction from Council, the City’s Finance Department is responsible for assisting departments in developing their detailed draft budgets every year. A series of budgets are tabled, broken down by category so that the various City Committees responsible can review and discuss what is proposed and ensure everything included complies with existing City plans.
The City must maintain a balanced operating budget. The Municipal Act prohibits the City from running a deficit on operating expenditures. The city can only borrow funds and incur debt for the Capital Budget.
Programs delivered by the City can be segregated into the following major categories. The amount of budgetary discretion that City Council has over the services listed under these various categories varies significantly:
- User-Funded (e.g., water and sewer, parking, garbage collection): These programs are funded entirely by the residents who use them. Revenues from user fees must be used to maintain related operations and capital.
- Non-discretionary (e.g., long-term care, public health, social services, debt charges): These items are provincially legislated and the City is obliged to fund the related operations and capital.
- Limited Discretion (e.g., policing): The police budget is developed by the Police Services Board. Council has no discretion except to refuse to approve it. Council does, however, work closely with the Police Services Board as the budget is developed.
- Programs with Service Standards (e.g., transit, paramedics): Programs that have to meet minimum expected standards, like wait times, carry a minimum cost associated with maintaining that standard. Any improvement to that standard will require additional costs.
- Direct Service Programs (e.g., Libraries, Parks & Recreation): There is some room to alter funding among these programs, but any changes affect the level of service delivered.
- Support Services (e.g., Governance, Finance, Communications): These programs are essential both in supporting the departments that deliver direct services and in providing administrative oversight in running the business of the Corporation.
During development of the operating and capital budgets, Council has some flexibility for reallocating or reprioritizing funds between programs and services to address emerging issues. Given these limits on discretion and the financial realities of limiting tax increases to residents, it is difficult to address all these issues or to implement significant changes from year to year.
As real example, here’s how 2017 revenues and expenditures were allocated:
Where the money comes from- Operating Budget 2017
In 2017, funding for the operating budget came from multiple sources, noted above. Property taxes accounted for about 47% ($1.54B) of revenues. The rest of the funding came from Provincial and other grants (18% - $594M), Fees and service charges (25%- $819M), Payment in Lieu of Taxes (6% - $194M) and Reserves and other (4%- $77M).
For the Capital Budget (noted above), 49% ($322.5M) of revenues came from Tax Supported/Government Grants while 17% ($122M) was financed through debt. The remainder of the breakdown included Development Charges (11%- $69M) and Rate-Supported reserves (23% - $150M)). For the capital budget, the city can borrow funds, which means the future generations that will also benefit from capital investments, new assets and new infrastructure also share in the costs.
Where the Money Goes- Operating budget by Service
The total operating budget in 2017 totalled $3.273 billion. Here’s a breakdown: Transit Services (15% - $503M), Community and Social Services (13% - $433M), Water and Sewer (10% - $350M), Ottawa Police Services (10% - $317M), Capital Formation Costs (9%- $307M), Emergency and Protective Services (9% - $280M), Governance and Program Support (7% - $227M), Parks, Recreation and Culture (7% - $232M), Roads/Traffic/Parking (6% - $190M), Housing Services (5% - $168M), Ottawa Public Library (2% - $50M), Planning, Building Code and Economic Development (3% $89M), Public Health (2% $57M), Solid Waste (2%- 68M).
In 2017, Capital Budget expenses went to fund Drinking Water and Wastewater Services (34% - $179M), Transportation Services (21% - $111M), Transit Services (16% - 111M), Police Services (3% - $16M), Integrated Roads, Water and Wastewater Services (12% - $66M) and other tax supported services (14%- $74M).