Sat. May 21st, 2022

Article content

Several reports were released at City Hall this week that provide a snapshot of Ottawa’s municipal government’s financial health.

Advertising

Article content

Here are five things that property taxpayers should know about the state of the city’s books and plans for another tax:

Debt grows with LRT borrowing

Net long-term debt grew significantly by the end of 2020, mainly thanks to loans required to pay for LRT construction.

The debt burden was $ 2.95 billion at the end of the year after $ 300 million was added to fund the Phase 2 O-Train expansion.

Debt rose as the city took advantage of low interest rates to fund infrastructure projects and pay for LRT. For example, long-term net debt in 2015 was $ 1.6 billion.

The city downplays the level of debt by measuring it against the value of municipal assets. The city values ​​its assets – from sewer lines to recreation centers – to $ 24.1 billion, meaning the debt level is 12.2 percent of asset value. So as the rationale goes, the debt can be easily paid off by selling assets as long as there is a market for things like sewer lines and recreation centers.

Advertising

Article content

In the police of its debt, the city has set a threshold for repayment, so that the principal and interest for tax-subsidized debt does not exceed 7.5 percent of the municipality’s revenue, and the interest-subsidized debt limit is 15 percent. The total threshold is 8.5 per cent.

In 2020, the city paid $ 173 million in debt payments, which was almost six percent of the municipality’s revenue.

City sees a rosy financial picture in the first quarter without counting transit

The city saved millions in the first quarter of 2021, and funding from the top government COVID-19 helped keep the local government in black.

However, there is a caveat.

The financial report for Q1 2021, published this week, does not include OC Transpo, Ottawa Public Library, and Ottawa Public Health. These financial updates traditionally go directly to the agencies’ boards.

Advertising

Article content

As for the rest of the municipal government, the parts of the city budget that are dependent on property taxes ended the three months with a profit of $ 12.7 million. On the other hand, the part of the budget linked to revenue from water and sewerage bills had a deficit of $ 6.5 million.

The city received $ 25.5 million in pandemic funding from top governments during the first quarter in the areas of social services, emergency and protection services, recreation and customer service.

Running COVID-19 vaccine programs costs the city about $ 1.5 million between January and March, including health care costs. The city expects to recover the expenses from the province.

The city managed to save about $ 16 million on its own during the first quarter. Lighter than expected snowfall helped keep winter maintenance costs down.

Advertising

Article content

Annual budgeted overtime of 44 percent spent after the first three months of 2021

There was about $ 9.6 million in overtime paid to municipal government employees per year. March 31.

The response to the pandemic, including work at the vaccination centers, contributed to overtime costs.

Departments have overtime budgets, and the total city budget for overtime in 2021 is about $ 22 million.

Public works and environmental services had already spent $ 5.7 million, which is 76 percent of its overtime budget for the year.

The department that spent most of its annual overtime budget per. March 31, were financial services that used 85 percent of the allotment. However, the actual dollars are small in a multibillion-dollar city budget with $ 87,000 spent by the budgeted $ 103,000 for the year.

Advertising

Article content

Reserves grow on an important ‘tax stabilization account’

The total amount of the city’s reserve accounts is expected to fall by about $ 32 million this year, but there is still plenty of cash in the bank.

The city expects there will be about $ 416 million across all estimated reserves by the end of 2021.

Perhaps the most important of the reserves, especially in the COVID-19 era, is the “tax stabilization” reserve, which is used as a safety net for operating pressures. Staff expect the account to grow by about $ 3.1 million by the end of the year, bringing it to $ 54.6 million.

It is a healthy balance for the central operating reserve. The council voted in 2018 to ensure there is a minimum of $ 34.8 million in the account. Since then, finance staff have been working to build it up from a balance that was well below the threshold. In fact, the city exceeds the recommended maximum for the account by about $ 3 million.

Advertising

Article content

New tax primed for vacant homes

Homeowners who have units that are not in use are one step closer to paying additional taxes.

The city’s original plan would apply to vacant units in 2022, and owners would be billed in 2023. The city leans toward a tax rate of one percent of a property’s assessed value, on top of ordinary property taxes.

The city sees vacant housing as a roadblock to create affordable housing and rental housing.

Under a proposal, the city would consider a housing unit vacant “if it has been vacant for a total of more than 184 days during the previous calendar year.” The city estimates there would be 1,500 vacancies in the first year of the new tax program.

According to the results of a city survey in the city, 77 percent of participants support a property tax in vacant housing.

jwilling@postmedia.com

twitter.com/JonathanWilling

    Advertising

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourages all readers to share their views on our articles. Comments can take up to an hour to appear on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications – you will now receive an email if you receive a reply to your comment, which is an update of a comment thread you follow, or if a user you follow comments. Visit our Community Guidelines for more information and details on adjusting your email settings.

Leave a Reply

Your email address will not be published.