Report to/Rapport au :




4 November 2008 / le 4 novembre 2008


Submitted by/Soumis par : Marian Simulik, City Treasurer/trésorière municipale


Contact Person/Personne resource: Tom Fedec, A/Manager Financial Planning/Planification financiére

Financial Services/Services financiers

(613) 580-2424 x21316,


City Wide/à l'échelle de la Ville, City Wide/à l'échelle de la Ville

Ref N°: ACS2008-CMR-FIN-0046




2009 Draft Operating and Capital Budgets, High-Level 2010 and 2011 Budget Forecasts





1.   That City Council receive and table the Draft 2009 Operating and Capital Budget Estimates, including the recommended $35.2 million in options that would achieve the 4.9% property tax increase directed by City Council, for subsequent consideration by Council in Committee of the Whole to be held December 1 to 5, 2008, as required; and

2.   That the 2010 and 2011 budget forecasts, which incorporate the high level budget directions provided by Council, be received; and


3.    That any Council decisions impacting the 2009 Operating and Capital Budgets that are approved subsequent to the November 4, 2008 Council meeting be forwarded to the Committee of the Whole at the same time as the Draft 2009 Budget is deliberated.





The draft operating and capital budgets being tabled for Council consideration follow the directions that were approved on June 28, 2008 for 2009 and the high level directions for 2010 and 2011.  As directed by Council, a list of options for service reductions or revenue increases has been provided which will allow for:


·        The achievement of a rate of inflation tax increase for City services (not including any increased tax requirement from Police Services);

·        A $20 million Capital Levy (1.9% tax increase) dedicated towards addressing the infrastructure renewal gap; and,

·        The 2009 FTE’s to be capped at 2008 levels in line with the motion approved by Council.


The 2009 operating budget includes costs to maintain existing services (including those costs shared with the Province), to expand select services and to increase the service levels in other areas and includes an increased contribution to the capital program of $20 million to deal with the need for increased renewal. In total, the operating budget incorporates increased costs of $140 million including Police, which is partially offset by increased revenues from growth and from user fee increases of $30 million, leaving a net increase of  $110 million. 


Over the last few years Ottawa residents have indicated, through various surveys and public consultation sessions, that they would like the City to do more in transit services, social housing, and in road and sidewalk maintenance.  Fire, paramedic, and police are also consistently identified as priorities by Ottawa residents.  For this reason, the budget includes investments in more paramedics to improve response times, transit route improvements, an increase for Police, new street lighting, and an increased contribution to the capital program of $20 million to deal with the need for increased renewal.


With a 1% tax increase for Police, a rate of inflation tax increase for all other City services and a capital levy increase of 1.9% the City still needs to reduce its spending or increase its revenues by $59 million. The City has committed to reducing the cost of the services it delivers by improving overall productivity through a number of measures including increased investment of technology.  The management productivity target for 2009 is $24 million, which reduces the $59 million in spending reductions to $35 million. 


The Options for Reductions or Revenues were developed with the objective of trying to minimize the overall impact on the residents of the City while still trying to respect Council’s term priorities.  The options can be categorized under 5 headings:


1.      Increase User Fees to Reduce Level of Subsidization – new revenue from increased user fees to align with the guiding principles for user fees, as approved in the Fiscal Framework. The City will begin to recover the operating and a portion of the lifecycle maintenance costs thereby shifting more of the financial burden to the users and away from the property taxpayer.  In total, $7.43 million of additional revenue options has been identified.  


2.      Deferral of Proposed New Service Expenditures - deferral of costs related to new programming, where a contractual agreement has not been entered into.  In total $7.86 million in options are identified from deferring these items.


3.      Adjust Funding to Reflect Current Provincial Support – a number of programs are to be cost shared with the Province however the Provincial contribution is fixed, regardless of what it actually costs to deliver the program.  Options are proposed that adjust the City service levels thereby reducing the City funding required to align with existing cost sharing agreement.  In total, $3.97 million in reductions for 2009 are identified under this category.


4.      Accelerate the Achievement of Transit’s Cost Recovery Target of 55% -Transit Services options include the deferral of planned increases for Stittsville transit services, increasing the average fare and the resultant revenue to approach the 55/45 cost recovery target, and making adjustments to selected routes with low ridership.  In total the Transit options are worth $6.99 million.


5. Adjustments to Existing Services - Staff undertook a thorough review of each service the City provides to determine whether an adjustment to that service would impact the City’s: legislative requirements; basic services and standards necessary to support a sustainable community; public safety; ability to attract people and care for the community; and the on-going economic development. The proposed options ensure that the City’s statutory and regulatory requirements and the City’s emergency response services are not compromised, while at the same time investing in areas identified as Council priorities. The proposed options will generate net savings of $9.0 million.


The capital budget being presented on November 4, 2008 does not include any capital projects for transit, as Council is still in the process of deciding its transit priorities.  After Council adopts a new Transportation Master Plan a capital budget for transit will be presented.  A non-transit capital budget of $314 million for 2009 is being proposed.  As per Council’s strategy to bridge the infrastructure renewal gap, projects to renew existing assets have been increased by $40 million from 2007 levels.  These additional projects are identified in Document 6.





In 2007 City Council undertook a number of initiatives to clarify their term priorities and to identify a financial regime that would move the City towards the objective of financial sustainability.  Multi-year budget directions were one of the initiatives that Council adopted and as a result on June 28, 2008 Council approved:


That the 2009 draft budget be developed in accordance with the fiscal directions adopted by Council during the 2008 budget process and in accordance with the Fiscal Framework adopted in 2007.


The fiscal directions adopted by Council in 2007 required that the draft budget included the costs to maintain existing services, provided for service growth stemming from an increased population or asset base, provided for new programs or expansions that Council had approved, and provided for an increase to user fees to maintain or increase the current revenue to cost ratio.


The fiscal directions also include specific directions aimed at improving the City’s overall financial sustainability.  This included phasing out one-time sources of revenue in the budget that are funding on-going expenditures and including a management savings target in each budget.  The management savings are to be found without impacting services and serve as a direct reduction of taxation requirements.  In addition the fiscal directions provided:


·        An increase of $20 million in taxation annually until 2011 to bridge the funding gap for renewal of infrastructure

·        A tax increase of 1% to accommodate Police spending requirements

·        A rate of inflation tax increase for all other City services


In addition to the previously mentioned motion on the 2009 budget, Council approved the following on June 28, 2008:


            That staff be directed to include, in the 2009 draft tax-supported budget, proposed options to cap the FTE total at the budgeted amount for 2008 and identify options to reduce the total number by 500 excluding growth and related increases for front-line Police, Fire and Paramedics to be achieved by December 31, 2009;


And that these reduction options include the introduction and investments of new technology and/or business process reengineering.


This report contains a summary of the financial impact of the implementation of the various budget directions adopted by Council in 2007.  As in previous budgets the rate of inflation tax increase for City services does not provide enough revenue to cover all cost increases; therefore this report includes a list of options to achieve Council’s taxation targets.


The Police budget is presented separately and is not incorporated into this report.  In addition, the budgets for the Water and Sewer divisions, which are fully funded from revenues raised on the water bill, are not included in this report as they are presented under separate cover as directed by Council.





2009 Operating Budget


This section highlights each of the various directions approved by Council for building the 2009 tax-supported operating budget and provides a high-level breakdown of the various costs or revenues that result from implementing those directions.  Offsetting some of the changes to the 2009 budget are adjustments being made to the 2008 base budget. 


Adjustments to the 2008 base budgets are made after reviewing the forecasted year-end actual expenditures and revenues.  If the budget for an expenditure or revenue is known to be permanently lower or higher it has been adjusted as part of the budget setting exercise.  For example if 2008 revenues are forecast to exceed the budget, and the cause of the surplus is not a one-time event, the budget will be adjusted upward in 2009.  In total, adjustments, which increase the City’s costs by $10.5 million, are being recommended based on the forecasted results for 2008 operations.


Two items account for the majority of this adjustment:


·        Adjustment to social program cost sharing revenues to reflect actual levels ($9.0 million).


In the 2007 and 2008 budget, the budgetary provisions for provincial revenues associated with the various cost-shared programs were increased to reflect the funding agreements that were in place at the time.  Staff has been actively pursuing the Province to acknowledge this funding shortfall, however, no agreement has been reached and with the current economic situation no additional funding is expected.  The shortfall in cost-sharing revenues amounting to $9.2 million has been reflected as a pressure for 2009.


·        Elimination of one time funding provided in the 2008 budget for public health programs in anticipation of Provincial uploading of these programs in 2009 ($9.0  million).


In adopting the 2008 Public Health budget, Council had assumed that the net taxation requirement of this program would be uploaded to the Province in 2009.  In anticipation of this funding realignment, the 2008 net taxation requirement of the public health program of $9.0 million was funded from the City’s Tax Stabilization Reserve Fund ($4.9 million) and the City Wide Capital Reserve Fund ($5.1 million).  Based on the Provincial announcement on October 31, this uploading will not be occurring in the foreseeable future.  The net taxation amount for public health programs has been reinstated in the 2009 budget and 2010 – 2011 forecasts.


Other base budget adjustments include:


·        Decrease in Ontario Works caseload ($2 million)

·        Increased revenues in Child care to reflect actual experience ($1 million)

·        Reduced budgetary provisions for hydro and natural gas to reflect lower actual usage  ($2 million)

·        Reduced disposal fee costs at Carp landfill due to reduced residential tonnage ($1.5 million)

·        Reduced revenues at Trail Road landfill due to reduced Industrial / Commercial tonnage ($4 million)

·        Increased for actual experience for Workplace Safety Insurance Board (WSIB) costs in the Fire Services area ($1.5 million)

·        Increased Payment-in-lieu-of taxation revenues due to settling of values  ($3 million); and,

·        Other expenditure / revenue adjustments ($3.7 million)


A significant issue that has not been reflected in the above pressures is the potential loss of Payments-in-Lieu-of-Taxation (PILT) revenues as a result of the sale of federal government buildings to the private sector ($4 million).  This amount represents the education portion of the PILT payment that flows to the City.  With the sale of these buildings, these properties are now classified as taxable commercial properties resulting in the education taxes being transferred to the province.  Discussions have been ongoing with the Provincial government and a favourable resolution to this issue is expected in 2009.


     Direction 1.  That all the costs to maintain existing services be included in the 2009 draft budget


The cost of maintaining existing services is estimated to increase by $44 million in 2009 as a result of:


·        Projected contract settlements for City employees ($24 million);

·        Inflation on various goods and services:

o       Fuel $6 million – based on a price of $1.00 / litre for diesel representing a 9% increase over the 2008 budget level.  An update on fuel prices will be presented to Council in December for consideration during their budget review meetings;

o       Hydro / Natural gas $2 million – projected increases in 2009 to reflect normal heating and cooling season;

o Surface Operations $2.9 million - increases for various contracted equipment for summer and winter maintenance activities;

o Transit vehicles $2.4 million - increases for parts;

o Solid Waste $0.7 million - to reflect increases in collection contracts; and

o       Other goods and services ($1.3 million).


Direction 2. That the costs of maintaining legislated and cost shared programs be included in the 2009 draft budget and as the Province uploads the cost of any of these services, the vacated tax room be used in the following order:


a.       to address unsustainable revenues built into the budget;

b.       to fund an increased contribution to capita; and,

c.        to reduce the impact of inflation on the city budget.


The legislated / cost-shared services include social assistance, social housing, childcare, public health, long-term care, paramedic services and the Municipal Property Assessment Corporation (MPAC) costs. The City’s share of these services are projected to increase by $11 million net as a result of:


·        Projected contract settlements for City employees in these specific programs ($4.0  million);

·        Rate increase for Ontario Works and Ontario Disability Support Program (ODSP) recipients, ODSP Program caseload increase, additional requirements for Housing operations and rent supplement programs and increased rates to Child Care service agencies  ($4.8 million net);

·        Projected decrease in the Ontario Works caseload along with associated staffing ($0.3 million);

·        Increased requirements in public health programs ($0.7 million);

·        Projected increase in MPAC costs ($0.5 million);

·        Minor budget requirements in several departments as a result of legislation or regulations, which totals $1.4 million; and,

·        The impact of year three of 4 year phase-in to upload ODSP drug costs to the Province ($6.6 million).


In 2007, the Province announced that it will upload the costs of the Ontario Disability Support Program over a four period beginning in 2008 with the prescribed drug program.  Specific program components are to be uploaded each year.  Based on the 2008 budget, the net tax requirement of $60 million necessary to fund the Ontario Disability Support Program is to be transferred to the Province for funding as follows:


 2008  - $12 million

 2009  - $7 million

 2010  - $21 million

 2011  - $20 million


In the 2008 adopted budget, $25 million in one-time revenues were included.  By definition, one-time revenues are not sustainable sources of revenue to fund permanent City services.  As per Council’s direction to use vacated tax room to first address unsustainable revenues, the $7 million reduction in the City’s 2009 tax requirement resulting from this funding transfer to the Province will be used to partially off-set the one-time revenue provision in the budget.  The result is that the one-time revenue pressure is reduced from $25 million to $18 million in the 2009 draft budget.  However, it is projected that there will only be $13 million in the Tax Stabilization Reserve Fund to offset the $18 million which will result in an additional pressure of $5 million.


Direction 3. That the costs of growth be included in the 2009 draft budget and that the revenue from new assessment included in the 2009 budget be used as an offset to the direct costs generated from growth


The cost of growth to City services included in the 2009 budget totals $16 million, and is categorized as follows:


·        The full year costs of programs that were expanded in 2008 but were only budgeted for on a part year basis in the 2008 budget ($1.8 million);

·        The costs associated with new capital infrastructure either built or transferred to the City in 2008 ($4.5 million);

·        The costs associated with programs that must increase to reflect the increase in population ($8.8 million); and,

·        The resulting increases in City operations that support the programs identified in the previous two bullets ($1 million).


For 2009, the amount of taxes raised from new properties added to the City’s tax roll is projected to increase by 2%.  As the Police Services have their own tax rate, they share in these new tax revenues.  A 2% increase in assessment will generate additional taxation revenues of approximately $17 million (net of the Police’s share of $3.2 million).  The 2009 tax roll will be received in mid-December from MPAC, at which time the actual growth can be calculated and if required adjusted before the final budget is set.


Direction 4. That new operating needs be included in the 2009 draft budget.


Attached, as Document 2 is a list of service expansions amounting to $19.4 million that have been included in the 2009 draft budget. 


These service expansions are categorized as follows:


·        Approved by Council in a prior report, through a motion when setting budget directions or as submitted by the Ottawa Library Board ($12.0 million);

·        Recommended by the Auditor General (net $0.7 million);

·        Required to implement organizational transformation initiatives and achieve greater efficiencies ($0.4 million);

·        Required to implement potential program changes or expansions based on upcoming report recommendations ($6.3 million).


Direction 5. That one-time operating expenditures continue to be funded from the closure of capital works-in-progress in the year, as per existing policy.


Non-reoccurring or “one time” operating expenditures are identified in the 2009 draft operating budget with the offset funding created from the closure of capital projects.  Capital projects that are more than 3 years old, or where there has been no financial activity within the last year, are reviewed annually for closure and the funds returned to source.  Funds returning to the City-wide reserve are used to fund one-time operating requirements. 


As the amount to be returned to the reserve from capital closings is unknown at this time, these items are not allowed to proceed until the funding is secured.  If sufficient funds are not identified, Executive Management Committee will identify those that can proceed and report to Council through the quarterly operating status reports. 


In the 2009 budget approximately $6.5 million of one-time expenditures is planned.  These include the following:


·        Increased subsidy for the Bell Sensplex as approved by Council;

·        Shenkman Arts Centre funding for public programming;

·        Service Excellence Program; and

·        Temporary staffing positions within Employee Services to support payroll applications.


Also included in this category are the additional capital requirements associated with the growth requirements for Paramedic Services.  The proposed staffing increase will require a one-time capital expenditure of $1.3 million for 6 new ambulances and 1 rapid response vehicle along with associated supplies. 


Direction 6. That the non-Transit user fees be adjusted to maintain the existing revenue to cost ratios as per the existing policies.


The impact of incorporating this policy is that user fees will generate an additional $4.0 million in revenues in 2009.  Included in this amount is:


·        Planning and Building fees $0.8 million – inflationary increase to maintain cost recovery ratios;

·        Parking fees $0.7 million - representing the annualization of 2008 approved fee increases plus the projected conversion of parking meters to pay and display technology;

·        Solid Waste garbage collection fees $1.3 million - a January 1, 2009 increase to the garbage collection fees amounting to a 4.9% rate for residential household service (from $82.00 to $86.00) and a 6.1% increase for multi-residential (from 33.00 to $35.00). The rate increase is proposed to partially offset the reduction in tipping fee revenues discussed under the 2008 base adjustment section in order to support the funding requirements of the Solid Waste capital program.


Direction 7. That the revenue-cost ratio for transit fares be raised to 50% by 2010 and that transit user fees be increased by 7.5% in 2009 and 2010. 


The recommended increase to transit user fares by an average of 7.5% will generate approximately $5.7 million in additional revenues.


Direction 8. That the contribution to capital increase by $20 million in order to reduce the funding gap for the renewal of City assets.


The Long Range Financial Plan identified that the City will have an infrastructure renewal funding gap of approximately $1 billion over the next decade unless new sources of revenue are found or the tax supported contribution to capital is increased beyond the rate of inflation.  The proposed additional $20 million in contribution to capital will be raised as a separate levy on the tax bill.  The additional $20 million in renewal projects have been identified in the capital budget as separate projects and have been included in Document 6 of this report.


Direction 9. That the tax rate budget directions for City operations be set at the rate of inflation


As of the end of September 2008, the average monthly change in the Consumer Price Index as determined by Statistics Canada stood at 2.14%.  A rate of 2% has been used for 2009 budget development purposes.


The result of the directions above are shown in Table 1.


Table 1

Expenditure or Revenue Adjustments




Base adjustments from 2008




Increased costs to maintain existing services


Increased costs for legislated/cost shared services


One Time Funding provided in 2008 – eliminated in 2009


One Time Funding provided in 2009– transfer from Tax Stabilization Reserve


Phase-in uploading of ODSP costs to the Province


Increased costs resulting from expanded services (growth)


Increased cost from new services


Increased contribution to capital


Sub -Total


Increased revenue from user fees (maintain revenue to cost ratios)


Increased revenue from new assessment


Increased revenue from transit fare increase




Council Directions - Property Tax Increases


City Operations 2.0%


Capital Levy $20 million




Options Required to achieve Council Direction



Management Savings


Direction 10.  That a management efficiency savings targets of $113.2 million be achieved over the 2008 to 2010 time period through productivity improvements, technology investments, asset rationalization and savings from procurement


As part of the 2008 Budget, Council approved an Efficiency Savings Program targeting a total of $100 million in savings to be achieved over three years (2008-2010).  This was in addition to the existing target of $13.2 million that remained at the end of 2007 and resulted in a total of $113.2 million in efficiencies to be achieved by 2010. 


Savings from the implementation of a management efficiency target is anticipated from the following areas:


·        Productivity – achieved through continuous process improvement initiatives to administration and service delivery operations.

·        Technology – the investment in technology will require the completion of business case analysis and funding will be provided as part of the strategic initiatives category of capital.

·        Assets Rationalization – efficiencies realized through facility closures or consolidation, which would require investment in some instances. These initiatives would be brought before Council for consideration prior to implementation.  Savings would be realized over time;

·        Procurement – modifications (subject to Council approval if required) to the way in which the City procures goods and services. Identification of savings potential to be established through a consultant-facilitated analysis of corporate spending and associated procurement strategies.


These management efficiency savings targets have been built into the 2009 and 2010 budgets as identified below.



Table 2


2009 Target





2008 Achieved

2008 Carry Forward

2009 Increase

Total Target


Total Target

Productivity  *







Technology Investment







Asset Rationalization














Target Total







* The 2008 savings in productivity reflects the achievement of the prior year target of $13.2 million.


The productivity improvement targets have been allocated to every branch across the Corporation in each year with the remaining three efficiency targets reflected in the “Non-Departmental” section of the City budget.  The impact of implementing the productivity improvements and technology investment targets is a forecasted decrease of 230 FTE’s across the corporation.


Progress against these savings targets has been reported to Council through quarterly status reports and through the presentation of business cases for asset rationalization and reporting on required amendments to the purchasing by-law in order to implement changes to procurement practices.  In the most recent report, staff have indicated that $25.2 million of the 2008 target of $38.2 million will be achieved with the remaining amount to be carried forward to 2009.  The 2009 increase of $5.0 million to the Asset Rationalization target has been deferred to 2010 as a result of Council’s decision to conduct public consultation sessions on any proposed facility closure.  


The result of having a $24.5 million management savings target in 2009 means that the options required to allow for a rate of inflation tax increase is reduced to $35 million.


Options for Reduction or Revenues


While the budget being presented includes a forecast for 2010 and 2011, budget options for these two years that allow for a rate of inflation tax increase have not been provided.  The changing economic climate reduces the accuracy of the forecasts for 2010 and 2011 and the identified gap between a rate of inflation tax increase and the list of cost increases is likely to grow.  Any list of options developed at this time would likely be insufficient and in fact may change depending on the size of the delta.  Options for 2009 that have a multi-year impact have been included and the impact on 2010 identified. 


1. User Pay Options


The revenue increases being proposed in the budget all reflect the user fee principles and targets adopted in the Fiscal Framework. These included:


·    Recovery rates for services to consider:

·    Operating and capital costs;

·    Rates for commercially available services;

·    Extent of private, commercial and community benefit (community benefit includes environmental considerations).

·    Service fees be implemented where individual beneficiaries of the service can be identified;

·    Services that provide a private or commercial benefit have a target of 100% recovery;

·    Services that provide a community or common good to recover between 20% to 80% of capital and operating costs.


The increases to user fees being proposed move the City to market rates or to a greater share of cost recovery.  The total value of these revenue increases are $7.4 million in 2009 and $2.6 million in 2010.  A brief summary of the proposed revenue increases and their impact on the 2009 budget is provided in Table 3 below.


Table 3

Revenue Options

2009 Impact


2010 Impact


Recover cost of administering BIA accounts



Increase rental rates for minor prime time and adult prime time



Increase cost recovery for hall, gym, pool rentals



Increase cost recovery for sports field rentals to minors and adults



Recover the cost of fourth and subsequent engineering submissions



Increase cost recovery for urban design review and development applications



Increase development application fees to move toward cost recovery



Recover cost of planning staff’s review of committee of adjustment applications



Increase market stand rates







Document 1 provides a detailed description of each of the recommended increases, their impact on the community and the impact on future budgets.


2. Deferral of New Needs Options


Council approves increases to certain program areas every year in response to service level concerns raised by the public, items raised by the Auditor General, and plans and strategies that have been adopted in the previous year to augment select services. These new needs identified for 2009 increase the budget by $20 million. As these increased services have not yet been provided to the public, their deferral is easier to implement than are cuts to existing services.  For this reason, the new needs included in the budget were reviewed and identified as options for deferral only where the City has not entered into a contractual agreement or where the cost of the new service was offset by increased revenues generated by the service.  A summary of the items included for deferral in each Branch is included in table 4 below.  A complete list of items for deferral and the resulting impacts on the community are included in Document 2.


Table 4

Deferral of New Needs Options

2009 Budget



Executive Director BTS – various accessibility initiatives



Corporate Communications – implement results of program review



Real Property – increased parks protection program



Employee Services – various labour relations initiatives



Bylaw Services – increased funding for special events



Cultural Services – various cultural initiatives and enhancements



Housing – tenant resource centres, conversion to supportive housing



Emergency Mgmt – various increased emergency preparedness initiatives



Parks and Recreation – implement audit recommendations, expand various recreation programs



Library – various increases in library services including expanded hours



Economic Development – increased economic grants



Surface Operations –  Green Partnership Program



Transportation and Parking – implement cycling plan, area traffic studies,







Subsequent to the initial budget direction Council passed a motion on October 22, 2008, resolving… “that before a property, land or building is brought forward as surplus, the community be consulted”.  As a result of this motion no facility closures have been identified as part of the 2009 budget options.


3. Adjust Funding to Reflect Current Provincial Support


The City of Ottawa provides a number of programs that are cost shared with the province.  The percentage share that the Province and the City will pay is defined in the various cost sharing agreements.  For many years the Province has been paying less than their percentage to deliver cost-share programs with the result that the City has been making up the difference.  Discussions with the Province over the last two years have been unsuccessful in getting this rectified.  The Province has fixed the amount it will contribute for particular programs.


The City is proposing to adjust the service levels for these programs to the point where the amount being contributed by the City represents its proportionate share of the amount being contributed by the Province.  The service areas that are affected by this strategy include public health ($2 million) and child care ($1.97 million in 2009 and $2.63 million in 2010).  Document 3 provides a detailed discussion of this strategy.  In total this strategy represents $6.6 million in expenditure reductions over two years.


4. Accelerate the Achievement of Transit’s Cost Recovery Target of 55%


Transit is the largest budget within City operations and, as a result, forms the largest portion of the tax bill for municipal services.  In 2008, Transit began a process of transforming the service it provides and a part of this process was to re-organize to integrate all the functions necessary to deliver the service within Transit Services.  In 2009, Transit services will continue this re-design process as the Branch works towards achieving its $12 million savings target and delivers on Council’s objective to achieve a 55/45 revenue to cost ratio.  Achieving Council’s cost revenue ratio target is an integral part of enabling Transit to enhance its services and transportation operations, therefore options have been developed that adhere to Council’s policy with respect to revenue generation by route by removing routes that have the lowest ridership per dollar of operating cost.   The Transit service reduction options total $6.99 million. 


A detailed fact sheet on the strategy to accelerate the achievement of Transit’s cost recovery target of 55%, adjustments to route with low ridership, and various deferral options to transit services is attached in Document 4 and a summary provided below.   If these options are taken, the Transit levy will remain the same in 2009 as it was in 2008.


Table 5

Transit Service Reductions

2009 Impact


2010 Impact



Adjust underperforming routes




 Defer increased service to Stittsville









5.  Adjustments to Existing Services


The last category of options is adjustments to existing services. Staff undertook a thorough review of each service the City provides to determine whether an adjustment to that service would impact the City’s: legislative requirements; basic services and standards necessary to support a sustainable community; public safety; ability to attract people and care for the community; and the on-going economic development. The proposed options ensure that the City’s statutory and regulatory requirements and the City’s emergency response services are not compromised, while at the same time investing in areas identified as Council priorities. The proposed options will generate net savings of $9.0 million.


Table 6 provides a summary of these options and Document 5 provides a detailed description and impact statement.



Table 6

Other Service Adjustments

2009 Impact



Cultural Services – reduction of art, heritage and cultural programming



Housing – cap the rent supplement program and capital contribution to OCHC



Long Term Care – adjust service levels to provincial standards



Parks and Recreation – eliminate outdoor rink grants and inflationary increases for recreation partners, reduce funds for recreation equipment, harmonize service for indoor skateboard parks, reduce area slabs open in the summer



Economic Development – reduce grants to OCRI



Surface Operations – Reduce tree maintenance, roadside ditching and dust control









In total, this list of options meets the objective of allowing for a rate of inflation tax increase for City services.  A summary of all the options and their value is included in the following table.


Table 7





Revenue Options



Defer New Programming



Funding Adjustment to Cost Shared Programs



Service Reductions - Transit



Service Reductions - Other







Impact on Full Time Equivalents (FTE’s)


In addition to meeting Council’s objective of a rate of inflation tax increase for City services, the options provide the FTE reductions required to meet Council’s objective of capping the number of FTE’s in the organization at 2008 levels.  The table below shows the proposed increases and decreases to the FTE count that result in the amount staying constant from 2008 to 2009 even though there will be a combined increase of 110 police officers and paramedics as well as 100 additional bus drivers and increased resources to support snow clearing and other seasonal surface operations. 


Table 8

FTE Summary

2008 Final Approved Total City FTE Complement



Less 2008 Increase to FTE Count (Police, Library)



Original 2008 FTE Complement



2009 Increase to Police and Paramedics



2009 Increase to Transit (higher revenue routes)


2009 All Other Increases




2008 Achieved Management Savings (Tax programs only)



2009 Management Savings Target


2009 Options List




2009 Projected FTE Complement



Costs of Workforce Adjustments


The scope and scale of the program and service reductions required to meet the 2009 budget challenge, and City Council’s direction, will lead to the elimination of jobs. 


Potential staff reductions include:



As in previous years, the City will try and accommodate the staff affected by these reductions with placement into vacant positions or newly established growth positions.  However, while this has proven to be effective in previous years, as vacant positions are gradually eliminated the likelihood of being placed is diminishing.


In order to provide an order of magnitude of the possible cost if all of the options are adopted and there were no ability to place affected staff in other positions, a range of severance costs was calculated.  The calculations below are based on an average severance payment for all various union groups with 5 years of service and with the years of service to trigger the maximum severance. 


Table 9

Number of Positions

With 5 years of Service

With maximum severance


$4.5 million

$21 million


In order to fund the cost of any severance payments required as a result of Council’s budget deliberations, and in accordance with various Union agreements, it is recommended that the funds be found by increasing debt on capital projects.  The 2009 capital budget is using cash financing from the capital reserves on projects that are debt eligible.  By substituting debt for those contributions from reserves, cash is available for these severance payments.  The cost of any severances would be reported to Council in the quarterly operating status report and at the same time the application of debt on individual projects would need to be approved by Council. 


2010 and 2011 High Level Forecasts


Council approved the following direction with respect to the 2010 and 2011 budgets:


·        That the 2010 and 2011 draft budgets be developed in accordance with the fiscal framework;

·        That the Capital Tax Levy be continued and increased by an additional 2% ($20 Million) in 2010.


On October 31, 2008 the Province announced the results of the Provincial-Municipal Fiscal and Service Delivery Review.  While there is no new impact on the City of Ottawa for the 2009 budget, there will be in 2010.  As the details of this announcement are made they will be incorporated into the City’s future year’s forecast. The three major impacts for the City’s budget from the announcement are as follows:


·        Uploading of Ontario Works costs to the Province starting in 2010 until 2018 at which time the current $30 million of city cost will be borne by the Province.

·        Uploading of court security costs from Police services starting in 2012 until 2018 at which the Province will pay for time the current $5 million of city costs.

·        Decrease of the City’s Ontario Municipal Partnership Grant of $10 million starting in 2010 to reflect the City’s decreased social service costs.


The fiscal framework contains various principles and targets that have been incorporated into the high level forecasts for 2010 and 2011. The most significant of the principles and targets are as follows:


·        Follow a financially sustainable budget by 2010;

·        One-time sources of revenue are phased out within the term of Council;

·        Tax increases not to exceed the rate of inflation in most years; and,

·        Asset maintenance gap to be gradually eliminated and assets fully sustained thereafter.


The identification of cost pressures and offsets for the 2010 and 2011 forecasts have been reviewed by staff in the various branches and have been updated from the numbers presented in the 2008 budget document. This review, combined with the directions provided by Council, results in the following forecasts.


Table 10






Increased costs to maintain existing services



Increased costs of legislated services



Increased costs from expansion of service (growth)



Increased Capital Levy



Increased costs from new needs



Elimination of previous year’s one-time revenues



Base Adjustment









Decreased costs from provincial uploads



User fees and transit fares



Management efficiencies



One time revenues for current year



Assessment growth



Capital tax increase (2.0% / -)



Citywide tax increase (2% / 2.0%)






Reductions required




The budget book contains the 2010 and 2011 forecasts at a branch level and identifies the high-level assumptions that were used for their development. While staff have used the best available information, results often differ due to the unpredictable nature of some of the assumptions. Some of the more significant results that could negatively affect the forecasts include:


·        The use of one-time revenues has been eliminated in the 2010 forecast in accordance with Council direction;

·        Assessment growth does not continue at a 2% level;

·        Management is not able to achieve the efficiency targets it has been assigned;

·        Inflation increases by more than 2% each year on materials and contracts or energy costs increase by more than 5% for diesel and 6% for hydro;

·        Ontario Works caseloads increase as a result of the projected economic slowdown;

·        The Province does not carry through with the full upload or eliminates the City’s Ontario Municipal Partnership Grant as a result of the uploading;

·        The City is unable to retain the education portion of taxes from Federal buildings that are sold to the private sector; and,

·        Contract settlements are above the projected levels assumed for the 2009 to 2011 time period.


2009 to 2011 Capital Budget


The 2009 to 2011 tax-supported capital budgets were built applying the multi-year directions approved by Council. A description of each direction and its impact on the capital budget follows.


Direction 11.  Capital Renewal Projects


a.       A continuation of the Capital Levy for infrastructure renewal projects

b.      Assign the additional funds to infrastructure that would shift from renewal to replacement; and

c.       That a priority list of infrastructure renewal projects be provided to City Council with the draft budget.


The Long Range Financial Plan III identified that the funding gap for renewing City assets over the next ten years is approximately $1 Billion. In order to reduce this gap, an additional $20 million is to be added to the renewal category each year for the next three years. The additional funds are assigned to projects that would prevent the asset from moving from requiring renewal to requiring replacement. The additional projects to be accommodated within the additional $40 million representing the $20 million approved in 2008 and the additional $20 million proposed for 2009 are highlighted within the details of the budget document and listed in Document 6.


In addition to the above recommendations, Council also implemented the following principles to guide the development of the capital budget.


d)      Increase the amount of debt based on assessment of need; and

e)      Increase the amount of debt temporarily to accelerate the elimination of the capital renewal gap.


The amount of debt the City typically authorizes to fund new capital project requests is approximately $40 million per year, which corresponds to the amount of existing debt that is retired in the year. The Fiscal Framework established a debt servicing (yearly principal and interest payments) target for both tax and rate-supported to not exceed 7.5 per cent of the City’s own source revenues. The City is currently at a ratio of 5.06%. In addition, the Fiscal Framework targeted the increase in debt servicing for non-legacy projects in any year to no greater than one-quarter of one per cent of property taxes or $2.6 million in 2008. This year the additional debt beyond the base of $40 million for non-legacy projects is $20 million which will require estimated debt servicing of $2.9 million in 2012 (10 year debt at 5% interest).  Factoring in growth, it is expected than an increase of $2.9 million in 2011 will be less than one-quarter of one per cent of taxation in the year.


Direction 12. That the current Development Charge funding principles be used to determine when growth projects can proceed.


By definition, projects that support the city’s growth are required to be partially funded by development charges. The funding principles determine when a project can proceed based on when a project is required in the overall development cycle and on the amount of development charges that have been collected.  The projects included in the 2009 to 2011 capital budget are based on a forecast of development charges that will be received in the next three years and the application of the funding principles.  As there will be a new Development Charge By-law required in 2009, the forecast budget for 2010 may be affected if there are significant changes in the by-law.


Direction 13. That a funding envelope for undertaking capital strategic initiatives over the next 3 years be established.


As part of the 2009 budget directions report, staff presented the recommended list of strategic initiative projects (excluding Transit projects and projects with dedicated sources of funding) for 2009 and 2010 as were approved by Council during the 2008 budget process.  Staff have reviewed Council’s stated term priorities and have recommended projects that total $65 million per year for the 2009 to 2011 time period.  Details of these projects have been included in the “Draft Operating and Capital Budgets - Supplementary Budget” document


Use of Provincial Revenues in the 2009 Budget


On August 25, 2008 the Province of Ontario announced that as a result of the Investing in Ontario Act the City of Ottawa would be receiving $77.3 million to assist in capital projects.  These funds have been included in the 2009 capital budget and have put towards capital initiatives that advance Council’s stated term priorities.  The following provides a breakdown of the projects recommended for funding with the Provincial revenues and the Council priority they address.


Table 11


Investing In Ontario Revenues

Priority:  Environment

Ottawa River Fund (contained in the water/sewer rate budget)



Urban Natural Areas – purchase of  lands designated as an urban natural feature


Environmental remediation projects


Energy Retrofit Program


Cycling Plan


Integrated Renewal Program – road portion of integrated projects that include sewer separation


Total for Priority



Priority: Community

Community Centre Expansions – major expansions to the Greenboro, Overbrook and Pinecrest Community Centres



Fire Stations – Ottawa South and West new fire stations


West District Library




Total for Priority



Priority: Social Housing

Renewal of Social Housing –stock



Total for priority



Priority: Transit

Transit projects to be tabled after adoption of the Transportation Master Plan



Total for priority







This allocation allows for Council to address various longstanding items in the Strategic Initiatives category of capital ($29 million), assist with new infrastructure required to service growth ($4.8 million), assist with the capital works required to clean up the Ottawa River ($33.5 million), and contribute towards the new transit priorities ($10 million).  The assignment of the $10 million of provincial funding to be used for transit related projects will be finalized when the transit capital budget is presented after Council approval of the Transportation Master Plan.


Direction 14. That the City create a separate Capital Tax Levy which is to be increased by an equivalent two per cent tax increase ($20 million) in 2008 and by an additional two per cent ($20 million) in 2009 and 2010. 


In accordance with Council direction, staff created a separate property tax rate for the Capital Tax Levy.  In addition, supplemental tax information is now provided with the tax bill that discloses the amount of property taxes that are raised to fund capital projects and for the repayment of debt charges.


The implementation of the preceding directions has resulted in a proposed 2009 tax supported capital program of $314 million, $373 million in 2010 and $369 million in 2011. The proposed 2009 capital budget totals $355 million with the difference being the rate supported portion of the Integrated Road/Water/Sewer program.  The rate-supported portions of these projects have been included to show the total value of the projects.  The rate-supported component has been recommended for approval by the Planning and Environment Committee and will rise to Council on November 12.


The amount to be spent in each functional area in 2009 is broken out by the three categories of capital (renewal, growth and strategic initiative) and is summarized below.  Included in the Roads and Structures area is the tax-supported portion of projects within the Integrated Road/Water/Sewer Program.


Table 12

Functional Area

Asset Renewal


Strategic Initiatives







Roads and Structures





Parks and Recreation





General Government





Fire / Paramedics / Emergency Measures





Solid Waste Services





Library Services










Cultural Services





Child Care





Long Term Care / Public Health / Housing





By-law Services











These projects are funded from the following sources.


Table 13 


Asset Renewal


Strategic Initiatives



$ millions

$ millions

$ millions

$ millions

Revenue from the province or others





Contribution from Capital Reserves





Tax supported Debt





Development Charges/DC Debt











Impact of Capital on Operating


Certain capital projects identified for funding from 2008 to 2010 will result in increased operating costs for the City. These projects are primarily in the growth and strategic initiatives categories of capital.  The additional costs result from the requirement to both operate and maintain the capital asset after it has been constructed or purchased. The operating impact of the projects included in the 2008 to 2010 capital budget is identified with each project.  The total operating impact is summarized below.


Table 14

Year in Which the Operating Budget is Affected

Forecasted Operating Impact of Capital Projects









2012 to 2018 Capital Forecasts


Included in the supplementary budget book is an identification of capital projects for the years 2012 to 2018. As there has been no direction provided for developing these budget years, the list of projects:



As such, this list of projects can be considered indicative of projects the City may undertake, but not as definite projects the City will undertake.


Changes to the 2009 Budget Process


Although the budget document and its format were substantially revised in 2005, input on the content and usefulness of the information is a critical part of the City’s continuous improvement process. These documents provide substantial information on the operating and capital budgetary requirements of City Services, however they were often viewed as being difficult to navigate by many.


The consulting firm of Plamondon & Associates was engaged by the City to review the content and layout of the document in conjunction with Councillor feedback and a review of best practices.  The project mandate was to investigate how the document could be improved in order to reduce the number of pages while still providing clear and concise information that would meet the needs of Councillors for decision-making.


As a result of this review, a new format was endorsed by Council, which presents the budgetary requirements in the following sections:


1) Budget at a Glance Section – provides high level information on general City wide statistics such as: population; demographics and inflation; high level budgetary data on proposed user fee rates; operating cost increases required to maintain City services; implement new programs; growth issues; expenditures on compensation and staffing levels; and, capital expenditures and reserve fund positions.


2) Corporate Summary Section provides separate schedules, which allow for a “drill-down” capability on revenues and expenditures starting with:


o          High level summary of the total operating revenues and expenditures (specific to City program & services) for the previous year, the 2009 budget and forecast, and the forecast for the next 2 years;

o          Capital related expenditures – contributions to reserve funds and debt charges; and,

o          All other expenditures.


The revenues from this Operating Budget Summary are then presented by type of revenue – property taxes, federal & provincial transfers, user fees and other various revenue streams.


The subsequent schedules in this section present on a department and branch basis:


o          Revenues, expenditures and net requirements

o          Changes required in 2009 to address cost or revenue pressures categorized under the following:

§                Base adjustments associated with 2008 actual results;

§                Maintain – additional requirements to deliver current programs at approved service standards;

§                Legislative – increases required to deliver cost shared provincial programs along with impacts of new provincial or federal legislation;

§                Growth – additional resources required to maintain new infrastructure, annualize 2008 program expansions and meet programming demands from population growth;

§                New Services / Needs – increases required to implement new programs stemming from Council reports, Auditor General recommendations, organizational transformation initiatives or pending staff reports.  Also includes additional one-time funding requirements;

§                Efficiencies – reflects the 3-year Management efficiency targets as approved by Council; and

§                User fees – increased revenues from fee increases per Council direction.

o          Changes in staffing requirements (FTE’s – Full Time equivalents);

o          Expenditure by type – compensation, materials and supplies, grants;

o          Capital reserve positions – showing the opening and closing balances in the City’s reserve funds along with projected transfers and contributions;

o          Departmental cost allocations – for services provided in support of operational programs and services.


3) Departmental Sections    budgetary information is provided on each department, which shows the revenues, expenditures and net requirements on a branch-by-branch basis.  Changes in resource requirements – expenditure, revenues and staffing - for 2009 are outlined and are based on the best available information at this time and on 2008 experience. These changes are categorized using the same breakdown as discussed previously. 


Additional schedules provided include:


o          Explanatory notes - provided on the projected 2008 results and on the rationale behind the proposed changes to the 2009 budgetary requirements;

o          User fees – proposed changes to the 2009 fees for City programs and services;

o          Outcome Measures – presents available key performance measures on specific program areas. (Additional work is being undertaken to develop meaningful measures for all program areas);

o          Budget Options – proposed adjustments to programs or increases in fees to support the achievement of Council’s property taxation direction;

o          Capital Projects – a summarized listing of the proposed 2009 capital projects and funding disclosure. (Full project details are provided in the 2009 Supplementary Budget document).


Only the City’s tax supported programs and services are presented in the budget book being tabled with Council on November 4th.  The draft budgetary requirements for the Police services will be tabled at the Ottawa Police Services Board and are presented in a separate document.  The budget requirements for the City’s water and sewer divisions which are funded from water and sewer user rates, are not reflected in this document as they were tabled and reviewed by the City’s Planning and Environment Committee and will rise to Council on November 12, 2008. 


In addition, it should be noted that the capital requirements of the transit system have not been included in this document as per Council direction.  These requirements will be presented separately to Committee and Council in January to allow Council to conduct and complete a full review of the proposed Transit Master Plan.  


During the 2008 Operational Budget Reviews for Administrative Services conducted earlier this year, members of the City’s Long Range Financial Planning Sub-committee determined that the 2009 budget process should include a rigorous budget challenge function prior to tabling.  The intent of this detailed review was to allow more time for Council to focus on setting priorities and would result in a more focused and streamlined budget document.


As a consequence, the City engaged the consulting firm of Plamondon and Associates to make recommendations on the design and operation of a “Budget Challenge Working Group”.  The design was to be guided by consultations with Councillors and a review of best practices. 


Based on the recommendations presented by the consultant, Council approved a process whereby the City’s six Standing Committees would conduct these budget reviews for their respective areas of responsibility.  Membership on each committee was to include the Committee’s Chair and Vice-chair along with the Mayor or designate and the City Manager, Treasurer, the Deputy City Manager for the service under review, Manager of Financial Planning and Bob Plamondon of Plamondon & Associates.


The mandate established for these challenge sessions was for each Committee to review and question the key assumptions and risks behind the forecasted actual results, the 2008 budget baseline and the budget pressures for 2009. This challenge function looked at the risk assumptions, user fee and other revenue estimations as well as any other issues that were deemed to be substantive and should be brought to the attention of Council and the community. 


The outcome of these meetings, which were held over the Oct 17 to 31 time period, have been summarized and is attached as Document 7.


Projected Impact on Average Residential Homeowner


For the 2009 to 2012 taxation years, property values in Ontario are to be established by the Municipal Property Assessment Corporation based on a valuation date of January 1, 2008.  Although the City does not benefit from the reassessment of property values through increased taxation revenues, reassessment will result in the shifting of tax burdens between property classes and also shifts within a class, particularly within the residential property tax class.  


Assessment related tax increases will be mitigated through a 4-year phase-in program in all property classes.  However some property owners will still see property tax increases that are greater than the overall City budget increase.  


Provincial tax policy requires that budgetary tax increases can only be passed on to tax classes that have a tax ratio below the provincially determined level. The Province has already provided regulations that will allow the City to pass a tax increase to the commercial property class in Ottawa at half the rate that is set for the residential class. If the tax increase adopted is 4.9%, the resulting tax increase in the commercial class will be a 3.5 % and a 5.4 % increase in the residential class.  A 5.4% tax increase is approximately $148 per year on an average home.


Rural residents receive a lower level of service for transit and fire services and therefore pay lower taxes than in the urban area.  The precise breakdown of cost increases for these services between the urban and rural areas is not available at this time.  Therefore, these numbers as presented should be viewed as very preliminary.


Impact on the Business Community


The impacts of this budget on the business community are provided throughout the document and the Draft Budget, and are also summarized in this section of the report.


With a reassessment to implement in the 2009 taxation years, the movement towards full Current Value Assessment (CVA) taxation will likely be interrupted.  The amount of claw-back required will not be known until tax policy is established, as without the adoption of neutral ratio there will be a shift from residential to commercial.


There are a number of options for service reduction or revenue increases that will impact the business community. The most significant include:



Impact on Rural Areas


The impact on the rural taxpayer is identified in the section dealing with general tax impacts.  The options for reduction that will affect rural residents include:


·      Reduction of the roadside ditching program; and,

·      Eliminate dust control on gravel roads.





The consultation on the Draft Operating and Capital budgets will be conducted through the ward meetings being held by Councillors and the public delegations sessions to be held by Committee of the Whole. 





Financial implications are identified within the report. 





Document 1            Increase User Fees to Reduce Level of Subsidization

Document 2            Deferral of Proposed New Service Expenditures

Document 3            Adjusting funding to Reflect Current Provincial Support

Document 4            Accelerate the Achievement of Transit’s Cost Recovery target of 55%

Document 5            Adjustments to Existing Services

Document 6            Additional Capital Works

Document 7            Budget Challenge Working Group Summary





Budgets will be amended as per Council deliberation and adoption. 



1.  Increase User Fees to Reduce Level of Subsidization from Property Taxes


Financial Impact of Option:  $7.43M in 2009 and $2.6M in 2010, for a total of $10.3M


Under this option, new revenue from increased user fees would better align the City with the user-pay operating principle, as approved by Council in the Fiscal Framework. The City will recover more costs, thereby shifting more of the financial burden of a service to the users of the service and away from the property taxpayer. 




It is broadly recognized that Canadian municipalities, in Ontario in particular, face significant financial challenges. Ottawa and other municipalities have limited tools for generating revenue to offset increases in operating and capital costs driven by aging infrastructure, the impacts of growth, and the public’s demand for increased programs and services. These factors are straining the budgets of cities right across the country and are requiring municipalities, including the City of Ottawa, to find ways to provide programs and services without increasing pressure on the property tax bill.


The 2009 draft estimates reflect the reality that the costs of delivering municipal services continue to rise.  These costs pose an increasing burden on property taxes and this burden could increase even further in a period of projected economic uncertainty.


In recognition of the financial reality of Ontario and Canadian municipalities, Council adopted, as part of its Fiscal Framework, an operating principle of user-cost sharing, which stipulates that:


 “…Users of municipal services that do not benefit the community as a whole (where an individual chooses to use the service or not) should have some responsibility for the costs of those services; thereby reducing the property tax requirement.” 


This guiding principle further stipulates that recovery rates for services should consider “operating and capital costs” as well as consider “the extent of private, commercial and community benefit”. 


With this approved principle in mind, the following options are presented in an effort to reduce the level of subsidy for a small number of municipal services that benefit specific groups within the broader community.  Under these options, the City would move towards equity in funding for services in support of private or commercial interests provided by the Planning Branch and in recreation facility rentals. 


User Fees for Services


Specifically, this option would recover the City’s costs for:



Reviewing fourth and subsequent engineering submissions: A flat fee of $750 for reviewing fourth and subsequent engineering submissions is proposed. While two to three reviews used to be sufficient for approval, there has been a trend towards four to five reviews before approval is granted, due to poor quality standards, and/or issues left unaddressed from the initial reviews.  As a result, more staff time has been required than was originally envisaged when the engineering design review fees were established.


Recover the costs of urban design review: This option is proposed to recover the costs of design review, which amounts to $150,000.  Urban design is identified as an objective in the City Strategic Plan and the Ottawa 20/20 Strategic Directions.  Costs of the urban design review are not currently recovered through application fees, and this option is consistent with the move to full cost recovery of the development review process.  The proposed fee for an urban design review would increase planning processing fees by 2% to recover the $150,000.


Development application fees: Ottawa’s Auditor General has reviewed the City’s costs for development applications and has determined the cost to provide this service is greater than the fees the City charges. At the present time, property taxpayers are subsidizing the cost of application reviews by approximately $200,000. This option will recover the difference from the applicants while reducing the burden on the taxpayer.  This change increases the level of cost recovery by 3%, from 92% to 95%.


Implementation of a processing fee for Committee of Adjustment applications: The introduction of a planning review fee in the amount of $300 for Minor Variance applications and $500 for Consent applications (severances) is proposed to recover costs (estimated at $400,000) of the five planning staff that review and comment on these applications.  


Administering Business Improvement Area (BIA) accounts: Ottawa’s 16 Business Improvement Areas buy support services from the City through the Finance Branch, and from the support of staff in Accounting, Tax, Accounts Receivable, Treasury and Assessment, Legal, and Economic Development.  As the cost to provide these services increases, they should be passed on to the consumer and not subsidized by the taxpayer. This option will reflect the true costs of providing these services to the BIAs and generate an additional $200,000 in savings for the taxpayer.  The proposed fee is 5% of the respective BIA levy requirement (which is based on the average assessed property of the BIA) and would be in the range of $3 to $220 per year.


Parks & Recreation Facility Rental Services


Municipalities across Canada are struggling with sustaining municipal recreation services as a result of increasing demand and the costs related to operating and maintaining infrastructure.


Historically, recreation infrastructure was funded through a series of one-time capital funds from the Federal and Provincial Governments.  In more recent times, both users and the municipal property taxpayer have absorbed increasing operating and lifecycle costs.  Given Council’s direction to decrease the level of subsidization of services where specific user groups are the beneficiaries (as contained in the Fiscal Framework), the Parks and Recreation Branch has reviewed the cost of operating arenas, sports fields, pools, halls and gymnasiums, as well as the makeup and proportion of the users of those facilities, in an effort to develop a fair and equitable proposal regarding the level of subsidization reasonable for the property taxpayer to contribute. 


This review of user fees highlights that the level of subsidy provided by the City varies by type of sport.  Activities such as indoor track and field, gymnastics and indoor tennis do not receive the same level of support from the City as hockey and soccer.  Consequently, in the first quarter of 2009, Parks & Recreation will be coming forward with a series of four white papers on the development of a new Parks & Recreation Master Plan. The white papers will facilitate Council debate on policies regarding recreation and decisions on the appropriate levels of subsidy. As an interim measure, until the release of these white papers and the completion of the Recreation Master Plan, it is recommended that the City begin to recover the operating and a portion of the lifecycle maintenance costs of these facilities, thereby shifting more costs to the users and away from the property taxpayer.


Of these services, it is important to note that the proposed rental fee increases are for rentals predominantly used by recreation associations (i.e., hockey associations and soccer clubs) and do not impact public programming that is available to the broader community (i.e. public skating and swim lessons provided by the City).  In the majority of cases, the following proposed rate increases would not be borne by individuals, but by organizations that can distribute the increased costs incrementally across their membership. 




The hourly operating cost for arenas is $214, and rises to $281 per hour when lifecycle maintenance costs are included.   Sports associations (including ringette, minor and adult hockey) account for approximately 90% of arena rentals.  Collectively, these associations represent 53,000 participants, or 6% of the population. Current rental rates are $122 per hour for minor users and $210 per hour for adult users, resulting in a current level of subsidization by the property taxpayer of 56% and 25%.  Staff is proposing to reduce the level of subsidization by raising the fees to $185 per hour for minors and $231 per hour for adults, an increase of 51% and 10% respectively.  This reduces the percentage of subsidy to 34% and 18%.  In alignment with previous Council directives, staff proposes to continue to subsidize minor users more heavily than adult users in an effort to promote healthy lifestyles in our youth.


Sports Fields


The average hourly operating cost for sports fields, including ball diamonds, is $27.60, and rises to $29.70 per hour when lifecycle maintenance costs are included.  Again, 90 to 95% of the rentals are by soccer associations and baseball leagues, which represents 90,000 people or 10 % of the total population.   Again, these user groups, like other sport organizations, should bear more of the cost of the fields, and fees should increase to be more reflective of cost recovery.  Currently, the rental rates on sports fields are $5.45 per hour for minors and $15.08 per hour for adults.  This represents a subsidization rate of 82% and 50% respectively.  Staff proposes moving towards full cost recovery by increasing rental fees for these organizations to $24.30 per hour for minors and $29.70 per hour for adults.  This would reduce the level of subsidy by the property taxpayer to 18% for minors and achieves cost recovery for adult users.  Again, in alignment with previous Council directives, staff proposes to continue to subsidize the youth users more extensively than the adults.




The hourly operating cost for pools is $116 and rises to $156 per hour when lifecycle maintenance costs are included.  Swim clubs and teams are not the predominant user of pools. However, for those swim clubs who do rent the facilities, they currently rent an hour of swim time for $42 per hour for minors and $51 per hour for adults. This results in a subsidization rate of 73% and 68% respectively.     The rates are proposed to increase for minor users to $103 per hour and $128 per hour for adults, an increase of 142% and 152%, thereby reducing the subsidy to 34% and 18% respectively.  Again, special consideration is given to the level of subsidy provided to minor users.


Community Halls and Gymnasiums


The composition of renters of halls and gymnasiums is diverse and includes a large number of community associations. In recognition of the fact that many of these community associations are service delivery partners with the City, the increased rates proposed continue to respect and reflect this.  


The City has very few stand-alone halls or gymnasiums and a large percentage of them are housed in community centres.  However, they also form part of aquatic facilities, arenas and recreation complexes.  As the size (square footage) and composition (pool, ice surface or multiple ice surfaces, etc.) vary significantly across the City’s recreation infrastructure, the precise hourly costs also vary accordingly.  Therefore, while the hourly operational costs are reflected in the staffing costs associated with hall and gymnasium rentals, the hourly lifecycle maintenance costs are too diverse to be meaningfully reflected in a single number, such as an average cost.  The fees range from $4.16 per hour for a small room to $114 per hour for a centrally located large room.  A benchmark comparison to other Ontario municipalities (Kingston, Toronto, Mississauga, Hamilton and London) shows that Ottawa’s rental rates are, on average, 50% lower for non-profit groups. 


The proposed 35% increase in hourly rental fees for community halls and gymnasiums will raise the City’s rates to a point where Ottawa will still remain 15% below the five-city average (fees will range between $5.62 and $154 per hour). The increase for community hall and gymnasium rental rates is based on lessons learned by comparator municipalities and in an effort to maintain access and community use. Higher increases are proposed in situations where a private or commercial group is renting the facility.


While operating costs associated with the provision of the majority of recreation programs offered to individuals and families are fully recovered through user fees, rental rates are an exception to this practice. Unlike individual participant-based recreation programs, facility rentals are predominately associated with community groups, or private or commercial interests. In keeping with the fiscal framework, the proposed increase in user fees seeks a larger portion of the costs being borne by the individual user groups.  Although the proposed rates represent a considerable increase over existing rental rates, the level of property tax rate subsidy remains significant across all of these rental categories.


In keeping with Council’s existing fees and charges policies, the proposed fee increases associated with public programs delivered by Parks and Recreation will continue to reflect inflation.


It is recommended that current programs that ensure access to programs and services through financial assistance and community association agreements be continued.


Implementation Timeline for Proposed Rate Increases




Fees associated with pools, halls and gyms that are not already booked could be implemented beginning January 1, 2009.


New fees associated with sports fields could be implemented beginning for the spring season in April 2009.


Implementation of the four options presented by the Planning Branch could be implemented in January 2009, realizing a full year effect.




Fees associated with ice rental could not be implemented until contracts for the 2009/2010 season are negotiated in April 2009, resulting in only a part-year effect for 2009.               




User fees and charges will have to be reviewed regularly to ensure that they are keeping pace with cost recovery directions set out in the Fiscal Framework.


Financial Implication


This option would increase revenues by $7.4M in 2009 and $2.6M in 2010, for a total of $10M in additional revenues.


Rental Category

Current Hourly Rate

Proposed Hourly Rate



Revenue Estimate



Revenue Estimate

Arena Rental – Minors





Arena Rental – Adult





Pool Rental

Prime Time

50m - $108.31

25m - $50.64

Prime Time

50m - $272.95

25m - $127.60



Pool Rental –



50m $90.27

25m $42.19


50 m $218.36

25m $102.80

Sportsfield Rental – Minor






Sportsfield Rental  – Adult





Hall Rental

$4.16 - $114.35

$5.62 - $154.37



Gym Rental

$28.55 - $49.61

$38.54 - $66.97





2. Deferral of Proposed New Service Expenditures


Financial Impact of Option:  $7.86M


This option recommends the deferral of costs related to new programming where the City has not already entered into a contractual agreement.


The central aim of Council’s Fiscal Framework is for the City of Ottawa to achieve long-term financial sustainability while, at the same time, strengthening service excellence.  A number of important steps have already been taken to advance the achievement of these priorities, including the implementation of the Efficiency Savings Program – a 3-year, $113.2M savings target directed by Council – that has identified $25.2M in efficiency savings and will reduce the number of full-time equivalent (FTE) positions by 100 in 2008, and targets an additional $37.5M in savings and a reduction of 230 FTEs in 2009.


Moreover, on October 8, 2008, the City of Ottawa launched an organizational realignment to improve the way municipal services are delivered to citizens, strengthen community development and better position the municipality to address the fiscal challenges of the future. This restructuring begins the change that will support more focus on achieving Council’s highest priorities, as identified in the City’s Strategic Plan 2007-2010. The new organizational structure will also help further a management culture focused on the goals of finding efficiencies and continually improving services, which are key to the City’s long-term sustainability.


In addition to these measures, there is the need to ensure that current programs and services provided by the City are delivered or maintained in a sustainable way before the City expands programs and services to satisfy new needs. To this end, this option proposes the deferral of capital and operating expenditure increases for new programs or services, or for expansions to existing ones.


This does not mean that the draft 2009 budget excludes all new funding.  On the contrary, the draft budget makes provisions for new services that Council has previously entered into service contracts for, including the Green Bin Program and funding for the Shenkman Arts Centre, as examples.


Table 1, below, identifies all of the new, or expanded services in the tabled draft estimates, and indicates those that staff propose for deferral under this budget option.


Table 1 – New Services/Needs





Proposed for Deferral (X)




Community and Protective Services



Funding for Tenant Resource Centres and Housing Support Workers.



Convert up to 100 existing subsidized social housing units into targeted supportive housing for people with mental illnesses and addictions.



Final year of funding for additional Francophone child care spaces.



Expand Ultra-Play program to 3 additional communities.



Extend the Youth-on-the-Move program season.



Staff to respond to Auditor General’s recommendations and corporate strategic initiatives.



Expand the Shared Care program and make it year-round.



Staff to implement branch’s marketing strategies.



Funding for renaming of outdoor signage at parks and facilities.



Increase public skating supervision in areas of high attendance.



Implement Food Safety Information System. 



Adjust market rate for Public Health Inspectors.



Expand needle recovery program.



Funding for the Shenkman Arts Centre.



3rd year of 10-year Community Funding Sustainability plan.



Support the implementation of Phase 3 of the Arts Investment Strategy and the Festival Sustainability Plan.



Support the implementation of Phase 4 of the Museum Sustainability Plan.



Funding for preventative maintenance and restoration services at City Archives.



Funding for the Corporate Art Acquisitions component of the Public Arts Program.



Funding for community gardens.



On-line application for tracking funding to agencies.



Funding for program operations at the Karsh-Masson Gallery.



Enhance the Civic and Commemorative Events program.



In-kind sponsorship of special events.



One-time contribution/repayment to reserve for taxi cameras funded by temporary surcharge in taxi licensing fees.



Implement corporate business continuity training programs.



Establish and manage multi-agency speciality teams to ensure a coordinated City response to Chemical Biological Radiological Nuclear Explosive (CBRNE) and Urban Search and Rescue (USAR) emergencies.






Business Transformation Services



Consult with residents with disabilities, as per legislated obligations, and inform the public about the City’s accessibility achievements.



Funding for the Parks Protection Program.



Safety Consultants to keep pace with increasing demands.



Senior Labour Relations Consultants to improve bargaining and management relationship with City’s unions.



Comprehensive Quality Assurance program for the 3-1-1 Contact Centre to full fill the Auditor General's recommendations to improve quality and consistency.



Restoring the hours of operation of the 311 Contact Centre back to 24 hours/day, 7 days/week.






City Manager’s Office



Base budget funding and staff for Enhanced Risk Management program (pending Council approval.)



Funding to defend Long-term Disability claims that have been denied by the City's external plan administrator.






Planning, Transit and the Environment



Additional lease space to accommodate Transit Services departmental re-structuring.



Performance Management



Support for economic development programs and funding for community economic development partners.






Public Works and Services



Funding for the Trees and Forests Maintenance Program.



Funding for the Green Partnership Program.



Funding for the Emerald Ash Borer Forestry Maintenance Program.



Impact of new organics program on waste and recycling collections contracts.



Impact of new organics program on recycling and organics processing contracts.



Additional funding for in-house collection of organics.



Additional Waste Inspector for new organics program.



On going communications, compliance promotion and program support for new organics program.



Maintenance of the Trail Road facility and buildings.



Fleet operating costs for new Hook Lift Truck for handling metals, Tool Cat and 1 Heavy Equipment Operator.



Groundwater and surface water testing.



Additional leaf and yard processing due to infestation of Emerald Ash Borer Report.



Rural leaf & yard collection.



Organic Grant Program Rebate.



Enhance existing cycling programs, as per Ottawa Cycling Plan.






Ottawa Public Library *



Community Outreach Librarian to support new Canadians.



System-wide Librarian and Public Service Assistant to increase teen services.



Extend operating hours at OPL community branches.



Summer students for the children’s rural summer reading.



Increase training budget.







* City Manager’s option for deferral.


3. Adjusting Funding to Reflect Current Provincial Support


Financial Impact of Option - $3.97 million


A number of programs are supposed to be cost-shared with the Province. However, the provincial contribution is fixed, regardless of what it actually costs to deliver the program.  Options are proposed that would adjust service levels, thereby reducing the City’s funding to align with the provincial cost-sharing formula. 




Ontario is the only province in Canada that funds social programs like those found in housing, and child care from property taxes.  Furthermore, only Ontario funds a portion of basic public health services, such as well-baby care, food and water quality assurance, health promotion, outbreak management and other services like control of rabies and meningitis, from the municipal property tax base. While the Province mandates the standards and overall costs of these programs, they are funded from a combination of provincial funding and property taxes. 


If the Province were to fund all of its mandated cost-shared programs, the average urban residential household in Ottawa would pay $670 less in property taxes per year. Ontario Cities have argued that provincially mandated programs, which are largely income redistributive in nature, should not be on the property tax bill. Demand for income redistribution programs typically increase as the economic environment deteriorates. This places tremendous strain on the ability for property taxpayers to shoulder the funding requirements associated with these increased demands.


On October 31, 2008, the Provincial Government and Association of Municipalities of Ontario released the results of the Provincial-Municipal Fiscal and Service Delivery Review consensus report, entitled Facing the Future Together.  With the release of this report, the Province announced the uploading of the municipal share of social assistance benefits costs starting in 2010, with full implementation by 2018 (3% in 2010 and reaching 100% in 2018). This is an important step to address cost-sharing arrangements between the City and the Province; however, the recent changes will be phased in over a number of years and are backend-loaded, meaning the majority of the funding will be received well into the future (2018). Importantly, this announcement regarding social assistance funding does not include any provisions for funding of child care or public health programs. 


Council has limited authority over these programs and cannot alter the cost-sharing ratios as prescribed by the Province. Ottawa continues to make a case that there are significant funding gaps in these two provincially legislated cost-shared programs. This means that the level of funding Ottawa receives from the Province does not accurately reflect the cost-sharing agreement.  


As directed by Council, staff have been working to obtain the funding required to close the current gap in these cost-shared programs. Towards this end, letters have been sent to the Provincial Ministers of Children and Youth Services, and Health and Long-Term Care. The Standing Committee Chair of Community and Protective Services, Deputy City Manager and the Director of Parks and Recreation and Children’s Services met as recently as this past August with the Honourable Deb Matthews, Minister of Children and Youth Services.


Given the announcement of the Fiscal and Service Delivery Review, the lack of results from letters and meetings with representatives of the Province, and the Province’s own constrained financial situation, as outlined in its recently released economic outlook, it is now clear that the Province will not be contributing any additional money to these two cost-shared programs in 2009.




Options are before Council to adjust municipal funding to Ottawa Public Health and to child care to reflect current provincial support and reduce the subsidization that the Ottawa property taxpayer is providing to these provincially mandated programs.


Specifically, these options would:



Aligning service levels for both public health and child care to provincial levels of funding ensures the City’s funding for provincially mandated, cost-share programs is budgeted in a manner consistent with the principles of the Fiscal Framework.


Ottawa Public Health (OPH)


Implementation of the options described below will generate a net savings of $2M by reducing the property taxpayer subsidy for Public Health.


Options include: 


1)      Eliminating budget pressures that would grow the funding gap, except those that will address immediate real and present threats to the health of the population; and

2)      Aligning service levels to the provincial level of funding.


The overall gap in Public Health funding is related to a range of provincially mandated, locally delivered and administered programs in communicable disease control, food safety, vaccine storage and monitoring, school health promotion outreach, multilingual translation, delivery of program materials, and a range of other service delivery elements.


The provincial cost-shared programs do not, in general, have clearly prescribed standards or associated line item costs.  Most cost-shared programs do not prescribe specific standards for the delivery of services; they simply set out the overall goals and priorities of the programs, some individual performance measures, and an envelope or per diem to fund the service.  Local service providers are left to design the services in keeping with the needs of the local community within the province’s prescribed funding formula.


Between 2005 and 2007, the provincial share of funding for mandatory public health programs was increased from 50% to 75% of the approved budget. Nevertheless, OPH remains one of the lowest per capita funded local health jurisdictions in Ontario, and, therefore, Council decisions during 2005 and 2006 budget deliberations authorized OPH to grow to better meet local health needs and provincially mandated guidelines. Due to the above-noted change in the funding formula, this should not have added any pressure to the municipal tax base; however, after the 2006 budget was approved by Council, the province decided to limit year-over-year growth in all health units to 5%. This led to the funding gap that must now be addressed. 


All public health services fall within program areas specified by the Mandatory Health Programs and Services Guidelines under the Health Protection and Promotion Act. There are no discretionary program areas.  Within certain programs there may be opportunities to identify areas where there is some discretion without compromising the essence of the programs. A detailed and comprehensive analysis and program review will be required to identify those program components. With the new Medical Officer of Health leadership in OPH, the planned reformed governance model for OPH, and the imminent revamping of the Ontario Public Health Mandatory Guidelines, this review will be undertaken during 2009.


1)  Eliminating budget pressures that would grow the funding gap, except those that will address immediate real and present threats to the health of the population.


OPH has submitted requests in the 2009 budget, totalling approximately $700,000, to address health and accountability needs in programs capped by the Province. These needs are in the areas of health data management, French services development, and adaptation and infectious disease control. All other budgetary pressures have been deferred. These deferred pressures would have allowed redressing past shortfalls in staffing levels predominantly in the school health promotion area, in emergency response surge capacity, and the maintenance of the full spectrum of public health protection and promotion programming to meet growth.


2)  Aligning Ottawa Public Health service levels with Provincial Level of Funding.


Aligning OPH service levels with the cost shared formula will take the form of the elimination of FTE’s from the multidisciplinary public health workforce. These include an epidemiologist, a nutritionist, nurses, project officers, and program assistants. The service reductions will be most acutely felt in the reduction of the speed of implementation of OPH’s multi-year investment in school-based health/nutrition education and promotion, in periodic delays in addressing phone-based enquiries, counselling and education, and in the ability to cycle the stockpile of certain supplies in the public health emergency preparedness program.


As noted above, a detailed and comprehensive analysis of OPH service levels will be undertaken in 2009, given the recent and imminent changes in governance and staff leadership, as well as the revisions to the Ontario Public Health Mandatory Programs. In the interim, a broad range of service reductions at a level of approximately 4% is planned across the range of public health programs, in order to meet the funding shortfall.


Social Impact


This option would result in the community receiving levels of prevention, education and direct services levels that reflect the actual provincial cost-shared funding levels.  The loss of the additional City funding (over and above the mandated share) will result in delays and reduced access to some public health services as well a reduction in investment of staff education and skills development.  


Implementation of the options described above will be in 2009.


Child Care


Reducing the subsidization the Ottawa property taxpayer is providing to reflect the Provincial level of the funding to this program will generate a savings of $4.6 million.


The City is mandated to administer child care services on behalf of the Province at a cost-share ratio of 80 per cent Province to 20 per cent City. The Day Nurseries Act (DNA) specifies standards of quality in delivering services and outlines criteria for fee-assistance eligibility for parents.  The City must achieve full compliance with the DNA.


The DNA was revised in 1998, at which time the municipalities were designated as the service managers for child care. In response to downloaded responsibility and in the absence of any provincial support, the City provided a series of funding increases to sustain child care services and the number of subsidized spaces in Ottawa. Since 1998, the cost of providing service has increased. The Province has not provided inflationary increases to funding, which over time has resulted in the funding gap growing even larger.


In addition to the inflationary pressure, and despite legislation related to French language services, the Province has declined to provide any funding to deal with the need for equity in subsidized services for Francophone child care.  The City has provided 100% property taxpayer funding to provide services to Francophone families in the community and address inflationary costs related to child care services.


Following commitments from the Federal Government, the Province implemented several initiatives intended to expand the child care system in Ontario in 2004 and 2005, specifically the Early Learning and Child Care and Best Start.  With the termination of funding from the Federal government, the Province capped its funding. Without an additional property tax contribution, the Provincially directed growth in these programs cannot be sustained, as they are no longer 100% provincially funded.


As a result of all the above-mentioned factors, there is an insufficient envelope of provincial funding for childcare services. Child care is a cost-shared program (80/20) with a total budget of $50 million. As of September 2008, the Provincial contribution is at $35M, representing 72%. The City’s portion is $15M, representing 28 %.  The City is currently contributing  $4.6 M in excess of the City’s mandated share in order to sustain existing subsidized child care spaces.  The Province has not adjusted the funding level to the municipality to maintain existing child care services or account for rising inflationary costs, service costs and increased demand for services. Simply put, additional funding has not kept pace with the rising cost of care. 


There are currently 19,975 licensed child care spaces in the City of Ottawa, of which 7,208 are subsidized.  The fee subsidy program is the largest portion of the child care services budget. Paying the actual (rising) costs of providing subsidized care will result in a reduction of service.  Other Ontario municipalities have absorbed fee subsidy service cost pressures within existing budgets through service level adjustments. This proposed option to align service levels to the provincial level of funding is consistent with the approach that has evolved in other municipalities across Ontario.


Social Impact


Aligning the fee subsidy service level with the provincial funding level in Ottawa would result in removing up to 700 subsidized child care spaces out of a total of 7,208 spaces. This would result in more children waiting for subsidized care. 


The reduction in the child care subsidy will mean that licensed child care providers will need to re-examine their business models. This option would also eliminate the final year of the Council-approved increase for Francophone child care spaces, since the targets respecting the proportion of Anglophone and Francophone subsidized child care will have been achieved. Should Council approve this option, the proportion of Francophone and Anglophone services will be maintained at the prescribed levels to maintain equity. 


Management of Fee Subsidy Program Within the Child Care Budget


The fee subsidy program is a cost-shared program.  The program establishes contracts with community agencies to provide licensed child care services to families that are eligible for a full or partial fee subsidy.  In the absence of provincial funding, the City has provided funds annually to increase per diem rates for subsidized services. Over many years a gap has developed between what the City pays for a subsidized child care service space and the rate that a full fee parent is required to pay for the same service.   


As directed by City Council, a recommended policy direction regarding fee subsidy stabilization will be tabled at Community and Protective Services Committee in January 2009. This option would ensure that no additional municipal funds would be used to provide annual fee subsidy rate adjustments.


Social Impact


This option would result in an overall reduction of funding for subsidized child care in the City. 


This option would also result in the elimination of the final year of the Council-approved increase for Francophone child care, as the prescribed ratio will have been achieved. Implementation of the options described above will be through attrition for all purchase of service agreements with agencies over the next 2 years, in order to minimize the impact on child care agencies. In addition, the phased implementation will provide the time necessary for child care agencies to update changes to their business models.




4.  Accelerate the Achievement of Transit’s Cost Recovery Target of 55%


Financial Impact of Option:  $6.99M in 2009 and $3.03M in 2010, for a total of $10.02M


Transit Services options include the deferral of planned increases in Stittsville transit services and removing service from selected routes with low ridership. 




Transit ridership in Ottawa remains strong and is growing rapidly. Yet, at the same time, the costs to provide transit service are increasing faster than the rate of inflation. Council directed that an increased share of the cost of transit services be provided from customer fares rather than from property taxes. The Transit Services Strategic Branch Review confirmed four objectives for transit: ease of mobility, economic efficiency, accessibility, and environmental improvement. To meet these diverse outcomes, there is a need to change the way Ottawa’s transit services are planned and delivered. The focus needs to be on delivering convenient, reliable services that are used by the greatest number of customers. By doing so, ridership growth can be supported and encouraged, and progress will be made toward the transit modal split targets that are needed for a sustainable future for Ottawa.


As of the end of September 2008, transit ridership is 4.8 per cent higher than it was in September of 2007. Based on current use, ridership will reach 100 million customer-trips in 2008, by far the highest level of transit ridership ever in Ottawa. (By contrast, transit ridership was 81 million customer-trips in 2000.) This rapid growth in ridership is driven by investments in infrastructure and service made in prior years, high fuel costs, and increasing traffic congestion experienced particularly during morning and afternoon commuting times.


For 2009, the City is well positioned to capitalize on a strong demand for transit service, provided it invests in areas where it has the capability to deliver consistent service with the desired quality standards and additional service on high demand routes.


The 2009 transit business plan, as tabled in the draft estimates, contains the following measures to support continued improvements in service quality and increases in transit ridership:



Some of the service improvements that are planned for 2009 include:



With these changes, transit ridership is expected to grow by 6 per cent in 2009, overall cost by 8.4 per cent, revenue from customer fares by 15.5 per cent, resulting in a fare-box recovery of cost ratio of 52.2 per cent.




Transit Services options include the deferral of planned increases in Stittsville transit services and removing service from selected routes with low ridership.


The percentage increase in property tax contribution to the cost of transit services in recent years has been in excess of overall property tax increases. This has placed a disproportionate burden on other City services to reduce costs to achieve overall property tax targets.


These possible transit service reductions have been identified as the way to reduce the transit budget with the least possible impact on transit customers, transit ridership levels, and revenue from transit customers’ fares. Under these options, the tax requirement to fund transit services would stay constant at 2008 levels. Implementation of these options, as described in greater detail in Table 1, would generate net savings for 2009 of $6.99 million and $3.03 million in 2010.


Even with the implementation of these options, transit ridership is expected to grow by 3 per cent in 2009, revenue from customer fares is also expected to grow by 13.1 per cent and the fare-box recovery of cost ratio would increase to 52.9 per cent.


These measures are consistent with Council’s Fiscal Framework and will put Transit Services on a more sustainable economic footing for the future.


Deferring Planned Increases in Stittsville Transit Services


The planned increase to transit services in Stittsville would not proceed in 2009. This would defer the transition to full urban transit service standards in Stittsville. Currently, transit service standards in Stittsville are at approximately two-thirds of the standards that apply in the rest of the urban area. Staff had developed a strategy for the last three years of a ten-year transition to full urban transit service standards, with service standards and transit tax rates rising to approximately 80 per cent of urban levels in 2009, 90 per cent in 2010, and 100 per cent in 2011.

Specifically, the service increases that would not proceed in 2009 would be:



Adjustments to Routes with Low Ridership


The routes proposed for changes represent those with the lowest ridership and, therefore,  have a revenue-to-cost ratio lower than the system average.  By removing carefully selected routes with low ridership, some customers will experience increased walking distance to the nearest bus stop, affecting 4.9 million customer-trips each year (4.9 per cent of system ridership).  However, substantially all customers will remain within a 10-minute walk of a bus stop.  This option will reduce the overall increase in ridership that the 2009 business plan and draft estimates projected. The estimated ridership loss for this option is 3.1 million customer-trips each year from the transit system (3 per cent of system ridership). Service reductions would begin in April 2009.


This reduction would reduce transit travel choices during peak periods in certain parts of the City. It would decrease evening and weekend service in some areas and eliminate this service entirely in other parts of the City. These reductions would remove transit as a travel choice for some residents. However, the impact on customers from making these reductions would be less than from making any other set of reductions, from further increasing fares, or from not proceeding with planned service improvements.


The following routes would have reduced service: 5, 6, 16, 18, 23, 25, 43, 51, 55, 87, 97, 101, 102, 105, 116, 117, 127, 128, 131, 136, 137, 141, 142, 146, 147, 149, 151, 152, 153, 154, 156, 165, 166, 167, 169, 171, 173, 174, 178, 181, 193, 306.


The following routes that would be eliminated entirely:

23, 25, 43, 51, 55, 102, 117, 153, 167, 169, 181, 193, 306




The service reductions on routes with low ridership would begin in April 2009.

Stittsville service increases would be deferred to the 2010 budget deliberations.


Financial Implication


Implementation of the options described above will generate net savings as follows:


2009 = $6.99 million

2010 = $3.03 million

            $10.02 million (per full year)



TABLE 1 - Low Performing Routes Detailed Summary


Details of services that would be removed:


Route 5 -          Service removed east of Rideau Centre Saturday mornings and evenings and all day Sunday

Route 6 -          Service removed Monday-Friday midday

Route 16 -        Service removed west of Rideau Centre Monday-Friday midday and evenings, all day Saturday and Sunday

Route 18 -        Service removed west of Rideau Centre Monday-Friday evenings, Saturday mornings and evenings, all day Sunday

Route 23 -        Service removed entirely

Route 25 -        Service removed entirely

Route 43 -        Service removed entirely

Route 51 -        Service removed entirely

Route 55 -        Service removed entirely

Route 87 -        Service removed west of Hurdman Station, Monday-Friday evenings, Saturday mornings and evenings, and Sunday all day

Route 97 -        Service removed on Woodridge Crescent

Route 101 -      Service removed east of Queensway Station Monday-Friday in midday and evening, Saturday all day

Route 102 -      Service removed entirely

Route 105 -      Service removed west of LeBreton Station (removes direct connection from O-Train to Gatineau and Gatineau to Tunney's Pasture)

Route 116 -      Service removed Baseline to Nortel Monday-Friday in peak periods

Route 117 -      Service removed entirely

Route 127 -      Service removed east of Blair Station Monday-Friday midday, all day Saturday

Route 127 -      Service removed west of Blair Station Saturday and Sunday mornings

Route 128 -      Service removed Monday-Friday evenings and all day Saturday and Sunday

Route 131 -      Service removed Monday-Friday evenings, all day Saturday and Sunday

Route 136 -      Service removed Monday-Friday evenings, Saturday and Sunday all day

Route 137 -      Service removed Monday-Saturday evenings, Saturday mornings and all day Sunday

Route 141 -      Service removed Monday-Friday midday and all day Saturday

Route 142 -      Service removed Monday-Friday evening, all day Saturday and Sunday

Route 146 -      Service removed Saturday morning and evening, and all day Sunday

Route 147 -      Service removed Monday-Friday evenings and Sunday mornings

Route 149 -      Service removed Monday-Friday midday and evening, Saturday and Sunday all day

Route 151 -      Service removed from Westboro Stn to Tunney's Pasture Stn Monday to Friday midday and evening and all day Saturday and Sunday

Route 151 -      Service removed from Lincoln Fields Stn to Carlingwood at all times

Route 151 -      Service removed from Baseline Rd to Westboro Stn Sunday evenings (would run only Lincoln Fields-Baseline/Clyde)

Route 152 -      Service removed Monday-Saturday evening, Sunday morning and evening

Route 153 -      Service removed entirely

Route 154 -      Service removed Monday-Friday midday and evening, and all day Saturday and Sunday

Route 156 -      Service removed from Meadowlands/Chesterton to Lincoln Fields Stn via Carlingwood Monday-Friday evening (would run only Meadowlands/Chesterton to Lincoln Fields Stn via Woodfield/Baseline Stn)

Route 156 -      Service removed from Woodfield/Merivale to Lincoln Fields Stn via Chesterton/Carlingwood Saturday mornings and evenings and Sunday all day (at those times, would run only Woodfield/Merivale to Lincoln Fields Stn via Woodfield/Baseline Stn)

Route 165 -      Service removed Monday-Friday midday

Route 166 -      Service removed Monday-Saturday evenings, Sunday all day

Route 167 -      Service removed entirely

Route 169 -      Service removed entirely

Route 171 -      Service removed Monday-Friday evening, Saturday and Sunday all day

Route 173 -      Service removed Monday-Friday evening, Saturday and Sunday all day

Route 174 -      Service removed Monday-Saturday evenings, Sunday all day

Route 178 -      Service removed Monday-Friday in midday and evening, Saturday all day

Route 181 -      Service removed entirely

Route 193 -      Service removed entirely

Route 306 -      Service removed entirely




5. Adjustments to Existing Services


Financial Impact of Option:  $9.003M in 2009


Staff undertook a thorough review of each service the City provides to determine whether an adjustment to that service would impact the City’s legislative requirements, basic services and standards necessary to support a sustainable community, public safety, the ability to attract people and care for the community, and on-going economic development. The proposed options ensure that the City’s statutory and regulatory service requirements and emergency response services are not compromised, while at the same time investing in areas identified as Council priorities.




In changing economic times it is important for municipalities to continuously review programs to ensure taxpayer investments continue to meet Council’s objectives. Council has set priorities to achieve long-term financial sustainability while at the same time promoting service excellence for citizens. Staff undertook a thorough review of each service the City provides to determine whether an adjustment to that service would impact the City’s:



The City services identified for proposed reductions are outlined in Table 1. None of these proposed service adjustments would violate the City’s statutory or regulatory requirements, and none of them compromise the City’s emergency response services.  Furthermore, as a result of the motion passed by Council on October 22, 2008, resolving ‘that before a property, land or building is brought forward as surplus, the community be consulted’, no facility closures have been identified as part of the 2009 budget options.


All of the services identified for adjustments may be considered essential to individuals or specific groups in the city.  However, compared to the multitude of services and programs the City provides, these proposed adjustments do not seriously impact the functioning of the city, nor do they compromise general public safety. 


Table 1 – Adjustment to Existing Services


















Reduce Arts, Culture and Heritage funding.








Impact: The total funding allocation in arts and heritage funding is reduced by 42%, and the funding for festivals and events is eliminated.


Cap Ottawa Community Housing (OCH) Public Housing capital program at 2008 levels.







Impact: This would reduce the ability of OCH to maintain Public Housing properties over the long term. 


Cap rent supplement programs at 2008 funding levels.







Impact: This capping would reduce the total number of rent supplements available and therefore reduce the number of units that are subsidized. 


Eliminate inflationary increases to funded recreation service delivery partners to maintain existing services.







Impact:  A possible reduction in service levels as a result of inflationary costs.


Long Term Care – Adjust service levels to provincial standards







Impact: Service reductions in nursing and personal care and in support programs for residents.  These reductions will be partially mitigated through are series of measures including changes to the organizational structure and streamlining work processes.


Eliminate the purchase of ice from two Public-Private-Partnership (P3) facilities, which is then sold to the public at City rates.







Impact: This ice time would be offered by P3 partners at market rates, which are higher than City rates. This would result in 3,200 less hours of ice available to the community at City-subsidized rates.  P3 partners would not be required to provide ice to the community as per existing policy.


Reduce fixed asset budget by 25% for recreation facilities.







Impact: Older equipment and furnishings at City facilities would not be replaced.


Eliminate Outdoor Rink Grants.







Impact: Would impact the establishment of 236 outdoor rink locations across the city. Communities could choose not to maintain a rink without the grant. City will offset $250 for insurance costs for those communities willing to deliver the service without the grant.


Close two indoor skateboard parks in Stittsville and McNabb during the summer months, which will harmonize service levels across the City.







Impact: Children and youth in the affected communities would have to travel farther to use outdoor skateboard parks.


Reduce current service standards by closing 3 of 23 arena slabs during summer months (May-August) at the Stittsville, W Erskine Johnston, and RJ Kennedy arenas.







Impact: Some residents would have to travel further for some programs.


Reduce support of specific OCRI-delivered economic development programs, such as Global Marketing, the Entrepreneurship Centre and marketing/communications, which support businesses, investors and entrepreneurs.







Impact: Represents a 7% reduction of City's payment to OCRI. The capacity to leverage other private and public sector investment would be reduced. There would be less ability to respond to foreign/domestic investment inquiries and to promote the city as a place for investment that results in job creation.  The Entrepreneurship Centre will not be able to maintain its storefront presence at City Hall and will be relocated. Requires the City's Service Agreement with OCRI to be renegotiated to reflect reduced funding levels.


Reduce roadside ditching by 25%.







Impact: The current frequency of cleaning/maintenance cycle of once every 14 years will be impacted. Increased flooding problems would result because of increased vegetation growth in ditches. Reduction in drainage of existing road base will also result in the deterioration of rural roadways. This would  result in reduced lifecycle of roadways and increased long-term maintenance costs.


Eliminate gravel roads dust control program.







Impact: This will eliminate the service citywide and result in increased dust pollution for residences, businesses and farms located on gravel roads. This option would also result in the deterioration of gravel roads and increased long-term lifecycle costs. 


Trees and Forests Maintenance Program and Improvement Strategies Report submitted in 2006 with 5 year phase-in beginning in 2008. ACS2006-PWS-SOP-0005







Impact: Elimination of this funding suspends the implementation of the Forest and Tree Maintenance Strategy, which means that City's trees will remain on a reactive trimming cycle of once every 35 years. It will also impact the updating of the City's Tree inventory needed to manage for invasive insects such as Emerald Ash Borer.


Eliminate additional rural road ditching and graveling ($670) and overlays ($130K) funded by the Rural Affairs Office







Impact: This would result in increased flooding problems through increased vegetation growth in ditches, reduction in the drainage of existing road bases resulting in deterioration of rural roadways, reduction in the gravel road preventative maintenance and an increase in gravel road rutting. Reductions in the rural road upgrades portion of the funds would result in the elimination of upgrades to gravel surface structure and, in some instances, reductions in the surface treatment of gravel roads.



Additional Capital Works

(to proceed with approval of Capital Levy)



Capital Levy Funding


Current Funds

Additional Funds




Roads & Roads Related






Integrated Water / Sewer / Road Program (Road component*)



King Edward (Laurier - Sussex)*



Bank St (Wellington - Hwy 417)*



Wellington St Phase 2 (Parkdale to Bayview)*



Bronson Ave (Queen - Rideau Canal)*



R-O-W / Easement Adjustments



Infrastructure Management



Scoping Pre/Post Engineering for 2010






Resurfacing - Various Locations



Street Light Rehabilitation



Rebuild / Modernize / Upgrade Traffic Control Systems



Rural Roads - Ditching



Rural Roads - Gravelling



Rural Road Operational Improvements



Renewal / Replace Misc Structures (under $1M)









Parks and Facilities






Clyde Avenue Facilities – replace Trane HVAC Units at Clyde Avenue facilities.



Creative Arts Centre North building - replace the north building roof, replace the rooftop HVAC units (4) and replace windows in Unit 7.



Creative Arts Centre South building - replace the south building HVAC units (7).



Hintonburg Park - replace perimeter masonry wall in area E and F (phase 1 of 6) at Hintonburg Park.



Hunt Club Riverside Community Centre - replace the rooftop mechanical system as part of the planned renovations.



Mooney's Bay Complex - replace the rubber 400M running track at the Mooney's Bay complex at the Terry Fox Athletic Facility.



Ray Friel Complex - building and pool systems mechanical remediation at Ray Friel Recreation Complex.



Routhier School Community Centre - replace hot water radiators, upgrade mechanical systems, replace gymnasium air handling system, restore windows and replace fire alarm system



Jack Charron Arena -  replace door and window plus a total roof replacement. 



Nepean Sportsplex - roof replacement, asphalt re-construction of front parking lot and arena # 3 floor replacement.



Carleton Lodge –roof replacement work, flooring replacement, interior door replacement and parking lot repairs.



Pinecrest Recreation Complex - remediation and replacement of pool ceiling. 



Walkway Resurfacing in City Parks - re-surfacing of asphalt walkways within the park inventory.



Refrigeration System Replacement (Rural) - replace refrigeration compressors at Erskine Johnston Arena and Richmond Arena



Terry Fox - Main Building - roof replacement. 









Information Technology



Network Infrastructure Renewal - replacement of an additional 25 servers (60% more than originally funded) $200K, invest in virtualization technology $100K, initiate the data centre consolidation activities $200K, replace the UPS $300K and replace aging data communications equipment $200K.













Budget Challenge Working Groups

October 31, 2008





Five budget challenge working groups comprising Councillors, Bob Plamondon and senior city management met between October 17-31 to review staff estimates for the 2009 operating budget. 


To assess the reasonableness of staff estimates the working groups analyzed variances between budget and actual for 2008, as well as pressures and changes for 2009. The working groups did not examine base budgets, a task that is contemplated under the strategic branch review process.


As a result of budget challenge, management reviewed their estimates for revenues and expenses by $13.7 million.  Potential improvements to the city’s budgeting practices were also noted.


Various limitations meant that the working groups did not examine the following areas, which should be challenged by Council as part of its deliberations:





On August 28, 2008, Council struck six Budget Challenge Working Groups to review the staff operating and capital budget estimates.  This is a collective report on behalf of the various working groups.


Kent Kirkpatrick, Marian Simulik, Tom Fedec and Bob Plamondon were members of each of the working group.  Members of Council, and the dates of the respective meetings, were as follows:


Planning and Environment

(October 17)


(October 20)


Community and Protective Services (October 24)

Peter Hume

Peggy Feltmate

Gord Hunter

Alex Cullen

Marianne Wilkinson

Gord Hunter

Diane Deans

Shad Qadri

Rainer Bloess

Corporate Services

(October 27)


(October 31)

Agriculture and Rural Affairs

(see note)

Larry O’Brien

Steve Desroches

Maria McRae

Christine Leadman

Glenn Brooks

Rob Jellett

Doug Thompson

Eli El-Chantiry


Methodology and Scope


Working group methodology included an examination of 2008 variances (budget to actual) and a review of the 2009 budget changes by category (under the categories of adjustments, maintain, legislated, growth, new services, user fees; efficiencies). The working groups did not examine budget options or the base budgets for city branches (This work is contemplated under the Strategic Branch Review process).


Although Council directed working groups to challenge the capital budget, the required data was not available.  Consequently, this part of the mandate was taken out of scope.  Given the importance of this data to the Agriculture and Rural Affairs Working Group it was determined that this challenge would be held after the budget estimates are tabled with Council.


Change in Budget Estimates


Budget challenge was an opportunity for both senior management and Councillors to review the estimates prepared by branch directors. Councillors and senior management proposed questions, provided observations and recommended changes. As a consequence of the challenge process management was requested to review the following adjustments, many of which have been  made  to the budget estimates.









PEC: Building Code Services  Other Permits

In 2008 projected revenue was $200 over budget.  The adjustment reflects a 3% increase over 2008 actual.




Economic Development

Transfer of funding to OCRI from the capital budget to the operating budget is shown under “New Services,” but requires a corresponding reduction in the contribution to capital  



CPS: Cultural Services & Community Funding

The Shenkman Centre is scheduled to open in May 2009.  The initial estimate provided for a full year of operating expenditures.






Parks and Rec.

In 2008 revenues exceeded budget by $3.341 million and expenses were $2.094 over budget.  No base budget adjustment was made for the net favourable variance of  $1.247




Child Care

Favourable results were experienced in 2008 due to a new policy related to “income testing.”  This policy will continue in 2009 and needs to be reflected in a base budget adjustment.




CS: Service Excellence

The request for new services in the Service Excellence portfolio was withdrawn.





Elected Officials

Two measures were discussed.  First, it was suggested that the salary and office budgets for elected officials be combined so that Councillors need manage one cap rather than two. The total amount allocated to individual Councillors remains as provided for in the budget estimate.  Experience indicates, however, that the global budget is not consumed 100%.  Since a budget represents expected spending, rather than a theoretical maximum, the overall estimate can be reliably revised downward.  This change would not be allocated to individuals.  Of note the surplus in elected officials and elected representatives was $1,044 in 2006 and $609 in 2007.




City Clerk

The base budget adjustment accounts for a surplus in printing.  Note: the base budget for protocol was increased by $400, which in past years had been supported with the surplus in the printing account.





Increase the revenue estimate for 8 new events at Lansdowne.





Expected increase in revenue on market properties



TRC:Infrastructure Services

Revenue was $750 over budget in 2008, while estimate provided for an $85 increase. 




Provide for revenue from a secondment to the federal govt



TRC : Fleet

Revise reserve contribution to Construction Price Index



TRC : Traffic and Parking

Reduced maintenance of meters in advance of pay and display consistent with 2008




Non Departmental




Ottawa Lands

Revise projections based on current estimates





Reduce contribution to election reserve based on estimated savings in lease costs



Penalty and interest

Increase by 2% over 2008



Provincial Offenses Act

Increase by 2% over 2008



Sub total



Grand Total – Changes in estimates from the Budget Challenge





Other Observations