The City of Ottawa is facing a deficit of $153.5 million related to COVID-19 in 2021, should the pandemic continue for another 12 months, according to the mayor.
In his speech introducing the draft 2021 budget on Wednesday morning, Mayor Jim Watson told councillors during the online meeting that "this year's forecasting work has been quite challenging given all the unknowns."
The city is facing a shortfall of $181 million for this year — $11 million lower than previous forecast after the city found savings. So far, the federal and provincial governments have provided the city with $124.2 million — $74.9 million for transit, plus another $49.3 million to cover other shortfalls.
Watson said he's confident the higher levels of government will not only compensate the city, which cannot legally run a deficit, for its COVID-19 related shortfalls for 2020, but also 2021.
However, city manager Steve Kanellakos told council that staff have a contingency plan to balance the 2021 budget should funding from the provincial and federal government not come through. If that's necessary, city staff would look first at putting off capital projects, then using reserves and, as a final resort, cutting services.
Despite these financial pressures, Watson said he's not supporting any layoffs or other cuts to city operations.
"The demand on city services has not gone down with COVID — it is higher than ever," he said.
Calls to 311 and bylaw are through the roof, there's an increased demand for paramedic and social services, and even building permit applications are up 45 per cent.
No cuts to transit service
Despite ridership that's slipped to just 30 per cent of pre-pandemic levels, OC Transpo plans to keep routes intact in 2021.
"When you start to cut service, you can disadvantage many of those that depend on it the most. We don't want to strand anybody and leave them behind," said transit boss John Manconi.
Manconi said cutting routes — even those that cater to federal public servants, most of whom are now working from home — would be difficult to undo once ridership recovers.
After looking at five scenarios, transit staff are assuming ridership of about 70 per cent in 2021, an estimate Manconi called "conservative."
That would still leave the transit service short $50 million to $60 million in lost fares. Add another $13 million for extra cleaning of buses, trains and stations during the pandemic, and the shortfall could rise to $73 million.
As with the main operating budget, transit staff assume upper levels of government will cover pandemic-related costs.
"I want to be clear, we're not just waiting for bailout money," said Manconi, who pointed out OC Transpo is deferring some $24 million in capital projects.
Just in case, staff will prepare a list of service cuts that could become necessary if that federal and provincial funding doesn't materialize, to be presented to the transit commission in June.
Transit fares will rise by 2.5 per cent on Jan. 1, except for EquiPass, EquiFare and the Community Pass, which will remain frozen.
3% property tax increase
As expected, the proposed property tax increase for 2021 is three per cent. That translates to an average $115 increase to the tax bill of a homeowner in the urban area, and an extra $88 for a rural homeowner.
Urban homeowners can expect their water and sewer bills to go up $37 in 2021, while rural folks not connected to the city's water system will see their storm water bills increase by $7.
The overall 2021 draft plan projects city operations costing just shy of the $4-billion mark, and pegs capital spending at $781 million.
It includes $15 million for affordable housing and money to hire 14 new paramedics.
Over the coming month, every city committee and agency will hold meetings at which the public can weigh in on the spending plans. City council will approve a final budget on Dec. 9.