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Index for my Toronto Budget 2004 project
Ottawa's City Budget
27/02/2004

Today I happened across Ottawa City Councillor Clive Doucet's blog about the Ottawa budget process.

Unfortunately he hasn't been updating it much. There are only three posts. But I have learned a fair bit about what's going on in Ottawa, and they seem to face many of the same problems that we do.

Doucet's first blog post is a great overview of the fiscal crunch Ontario cities are facing.

More interestingly, in his most recent, he writes:

There's two sides to the cities budgetary crisis. One of them is the result of the inequity in funding envelopes and downloading which cities are forced to live with (the famous 8% municipal, 42% provincial, and 50% federal split in tax revenue) which sees the federal government spending $500 million on anti-smoking campaigns in film theatres while the cities actually have to deliver non-smoking environments on a shoe string; $x millions in flu immunization advertising while the public health nurse who actually gives you your shot is a city employee on a life support budget, etc.

The other side of the budget crisis is something the big city Mayors are a lot less anxious to talk about and that is how city councils continue to move money from high tax/low-cost service areas to low tax/high cost service areas. It' s a water wheel that shovels money out from the financially sustainable parts of the city to the unsustainable parts of the city.

What Doucet is refering to in the second paragraph is an apparent conflict between urban and suburban regions within the municipality. The problem is that since municipal property taxes are based on the value of your house, expensive downtown areas end up paying much more tax compared to people in the newer, suburban parts of town. So, sprawl is cheap to build, the taxes are cheap, but the cost to the city in services is high. In an article elsewhere, Doucet writes:

The property tax is killing cities because it was never designed to carry national and provincial costs and because it twists the development of the city. Sixty-five per cent of our cities taxes are raised in the old parts of the city, but they don't stay there. They are funneled out to pay for new growth in the suburbs. We've seen the results of this water wheel south of the border and it's always the same. The older part of the city declines. Streets become broken and pitted. The centre becomes the home to the very rich and the very poor. Then you paper the suburbs with big box malls and parking lots - because the initial costs are cheap. All you have to do is asphalt some parking lots and throw in some off ramps. The real costs come later.

This isn't as much of a focus for Toronto since the suburban parts of the municipality have already completed their first burst of growth. Nevertheless, taxes are considerably higher in the core parts of the city for similar houses. Current value assessment and the heavily reliance on property tax in general are both working against smart development and attractive "neighbourhood" communities.

Anyway, just to give you a sense of the numbers, here is a comparison of where property tax dollars go in Toronto and Ottawa, based on Table 4 in The 2004 (Ottawa) Community Alternative Budget. I have indexed these numbers to the average Toronto property taxpayer. I.e., they add up to 100% for Toronto, but since Ottawanians pay more, their numbers hit 114%.

The first number is Toronto, second Ottawa:

  • Police, 22%, 15%
  • Fire, 10%, 10%
  • Hostels and Social Housing, 10%, 6%
  • Debt Charges, 9%, 8%
  • Public Transit, 8%, 20%
  • Social Services, 8%, 8%
  • Transportation (roads, bridges, signals), 6%, 6%
  • Parks and Recreation, 5%, 1%
  • Libraries, 4%, 2%
  • Garbage and Recycling, 4%, 2%
  • Public Health, 2%, 1%
  • Childcare, 2%, 2%
  • Ambulance, 2%, 2%
  • Information and Technology, 1.4%, 3%
  • Financial Management, 1.3%, 3%
  • Community Grants, 1.2%, 0.6%
  • Facilities Management and Real Estate, 1.1%, 6%
  • Homes for the Aged, 1.0%, 0.2%
  • Human Resources, 0.9%, 1.3%
  • Council, 0.6%, 0.6%
  • Planning, Building, Licensing and Standards, 0.6%, 2%
  • Other Corporate Services, 0.4%, 2%
  • Other Mandated Funding, 0%, 1.5%
  • Other People Services, 0%, 2%
  • Pay-as-you-go Capital Fund Contribution, 0%, 9%
  • Total, Toronto=100%, Ottawa=114%

The 2001 population of Ottawa was 774,072, which was 73% of the Ottawa-Hull census metropolitan area. Toronto was 2,481,494 people, which was only 53% of the metropolitan area.


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