Ottawa’s new mayor is fighting tooth and nail for a property tax freeze in the city’s ongoing budget negotiations. The stakes are high and Larry O’ Brien’s credibility is on the line: he ran a simple campaign centered on the bold promise to freeze property taxes for four years.
Simple perhaps, but compelling enough for Ottawa’s suburban voters to give O’Brien a strong mandate.
O’Brien’s victory has set tax rates at the top of the agenda. By shifting the debate to saving cash and by putting bold options on the table, O’Brien seems to have the interests of city residents at heart.
But, considering the complexities of public finance, achieving the mayor’s goal could prove difficult at best and crippling at worst.
For starters, it must be said that a four-year freeze on property taxes amounts to a drop in real city revenues. That’s because four years from now, taking inflation into account, city purchasing power will be substantially less than what it can buy today.
Second, just to maintain current service levels the city must raise taxes. In December, city staff revealed that just maintaining current service levels would require a 10-per-cent hike next year and eight-per-cent increases for each of the next three years.
For these reasons city managers say that keeping the mayor’s promise will require cutting services, raising already sky-high transit fees and/or delaying improvements to public housing. This reality check has sent city council searching for sacrificial lambs.
The search has sent the community health centres, seniors groups and advocates for the disabled into panicked resistance. Surely, they say, it is a worthy cause to support the health of the community and those who live at its margins.
The sensible middle ground in the tax debate is clearly to increase taxes at the rate of inflation – a solution supported by many councillors. This way, the city could rationalize tax increases, retain buying power parity and at least attempt to maintain the services Ottawa residents expect and rely upon. To compromise city services simply to keep a promise may be in the mayor’s interest, but not in the public’s.
If city council really wants to trim the fat off the city budget it should start by looking at the bloated wages of city bureaucrats. After all, during the campaign the mayor pledged himself to “firing layers of bulging bureaucracy.”
And bulging it is. Between 2004 and 2005 alone city staff salaries rose by approximately $7.5 million, from $15 million to $22.5 million. City manager Kent Kirkpatrick, notably, now earns a smooth $242,881.
But instead of the promised cull, the mayor is backing in to this promise by pledging only to eliminate currently unoccupied positions not filled in the next six months.
In failing to keep his daring campaign promises the mayor could pay a significant political price. The mayor may soon realize that, in the words of former prime minister Mackenzie King, “the promises of yesterday are the taxes of today.”
–Jeffrey Davis