Ottawa taxpayers face 7 per cent tax hike to fund OC Transpo, mayor warns

Mayor Mark Sutcliffe is calling on the federal government to provide new funding to support transit in the City of Ottawa, warning the city won't be able to afford to open and operate phase two of the Light Rail Transit system.

"We're in transit crisis," Sutcliffe said Thursday at Ottawa City Hall. "We don't even have the money to operate our available transit service."

The mayor said without financial help from the other levels of government to cover a $140 million a year gap in transit funding each year over the next three years, “It’s going to be very painful.”

"We’ll have to raise taxes and transit fares enormously, or we’ll have to cut service, drastically – either transit or other services, so we can pay for transit," Sutcliffe said.

Compared to 2019, the public service ridership was down 38 per cent this year, which is resulting in a $36 million reduction in revenue.

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Sutcliffe notes that their projections say the transit service needs at least 10 years to go back to pre-pandemic levels. He says the service has incurred big losses since the start of the pandemic, as passenger ridership significantly dropped affecting revenue. He says the system was built to accommodate public service workers; however, government employees have not fully returned to the office.

"When you lose your number one customer, when passenger traffic drops significantly- there is no easy solution to that," he said.

He adds the city has to stop comparing ridership to 2019 and start comparing it with what it expects it to be in order to financially recover.

The City of Ottawa continues to see a drop in ridership coming out of the COVID-19 pandemic, with fewer workers travelling to the office five days a week. Statistics showed 24.2 million passengers used OC Transpo in the first four months of the year, while ridership was projected to be 26 million.

OC Transpo has already announced cuts to O-Train service this fall, with off-peak service reduced to every 10 minutes during mid-day and evening periods.

OC Transpo’s budget is short $140 million a year over the next three years.

Sutcliffe warns without funding help from the upper levels of government, the transit levy would need to increase 37 per cent, equalling a seven per cent increase in property taxes. He is asking the government to offer operating dollars for the next three years.

Sutcliffe says the city has lost $100 million in revenue after the federal government dropped the amount of property taxes it pays on government buildings in Ottawa.

The mayor is making five requests to the Ontario and federal governments to provide "fairness for Ottawa."

"Pay your fair share from now on," he said.

The mayor is calling on the federal government to pay $100 million in back taxes on properties, guarantee payments in lieu of taxes for the next 10 years during the "downtown transition," and restore the "one-third, one-third, one-third funding model" for transit.

The City of Ottawa's new Trillium Line is expected to open this summer or early fall, with rail service between Bayview Station and Riverside South. The eastern extension for the Confederation Line is expected to open in 2025.

Provincial government points to deal

When reached for comment, the provincial government pointed to a major $543-million deal it signed with the City of Ottawa earlier this year, which included money for transporation priorities.

"Four months ago our government stepped up and signed a historic New Deal with City of Ottawa that provides up to $543 million in supports for the city," said Colin Blachar, press secretary for Ontario Finance Minister Peter Bethlenfalvy.

"This includes up to $181 million for transportation priorities to support the city and the uploading of the Ottawa Road 174 and was recognized by Mayor Sutcliffe as a 'big win for Ottawa, that will relieve significant budget pressures for the city and help deliver better services to residents.'

"As our nation’s capital city, we will continue to stand in strong partnership with Ottawa and call on the federal government to step up as a full partner with funding in critical areas of need."

The $181 million for "transportation priorities" does not include operating funds for OC Transpo. It includes $80 million for the Kanata North Transitway project, $51 million for the design and construction of a new interchange at Highway 416 and Barnsdale Road, and $50 million for repairing and upgrading rural roads and related infrastructure outside of Ottawa’s city centre. Other cash in the broader deal is for maintenance and rehabilitation of Highway 174, revitalizing downtown, addressing crime, housing, and emergency shelters.

When the deal was announced in March, the provincial government said, "Ontario and Ottawa are calling on the federal government to step up with support that recognizes its responsibility to the national capital and helps restore public transit ridership while revitalizing Ottawa’s downtown economy."

Other levels of government 'receptive' to demands: Sutcliffe

Sutcliffe told CTV's Katie Griffin on CTV News at Six that he's been in conversation with other levels of government for months, but the municipal budget will be drafted very soon.

"I've been talking to the premier and the prime minister and the cabinet ministers at both levels of government for months about this and they've been receptive to what we've had to say but I'm speaking publicly today because there's a sense of urgency about this now," he said. "We're heading into our 2025 budget process. We need to make some decisions and we need help from other levels of government or we will face rising property tax increases, we will face having to hike transit fares or we're going to have to cut services, like public transit, to cover the shortfall."

The City has been leaning on the possibility of additional funding from senior levels of government for some time. In 2023, the transit budget included a $39 million hole that staff assumed would be filled by the federal or provincial governments, but neither level included additional transit funds in their respective budgets for that year.

"We've done all kinds of things to manage the transit budget," Sutcliffe said.

So far this year, OC Transpo has cut jobs, hiked fares, increased fare inspections, and announced cuts to off-peak train service. 

Sutcliffe ran on a promise to improve transit and optimize OC Transpo bus service to "reflect the post-COVID reality and the new travel patterns for work." But he said less than a year after being elected that the transit service's finances were worse than he imagined. OC Transpo's long range financial plan revealed $6.6 billion in budgetary pressures over the next 25 years, mostly due to low ridership.

A major bus service review includes cutting suburban-to-downtown express routes and trimming around 74,000 service hours per year from the bus system, a 3.5 per cent cut from 2023 levels.

The changes are scheduled to come into effect after the Trillium Line LRT launches. An opening date for the north-south line has yet to be announced.

With files from CTV News Ottawa's Natalie van Rooy