Build Back a Better Municipal Budget (compiled)


Photo Credit: Kai Herzog-Keller


This Blog compiles recent correspondence with Mayor Watson regarding the City of Ottawa COVID-19 deficit and budgeting “reprofiling”. From most recent to first.

July 20, 2020

Dear Mayor Watson,

I appreciate the response by Ms Stephanson to my earlier email to you about the budget reprofiling exercise. Her text shows a level of professionalism and responsiveness one would hope for in a municipal government. Thank you for encouraging that.

Ms. Stephanson’s email ends with a suggestion that I and others in the community join forces with the City and others to call on funding from the Provincial and Federal government to help municipalities address the serious budget deficits caused by the current pandemic. Fortunately, a recent announcement by the Federal Government does just that, and may reduce or even eliminate the City’s operating deficit. That would be great, and allow the City to restore important programs. 

I do not, however, feel inspired to support provincial and federal aid to municipal budgets along the lines indicated by the reprofiling exercise. The slide deck on “Our Finances” provided by the City Manager to Council on June 24, has a slide showing guiding principles for the COVID-19 mitigation strategies. These call for budget cuts, deferral of expenditures and use of the sizeable City reserves in ways that: i) have no long-term impact on the financial sustainability of the City (that is, don’t undercut future revenue); ii) protect statutory and mandatory services (that is, avoid legal challenges); iii) consider Term of Council priorities (although none are mentioned) and; iv) reflect service forecasts for early 2021. These all seem reasonable considering the timeline for the exercise and its focus on internal accounting to protect the status quo. They do not, however, reflect the level and direction of leadership I believe we need.

Many governments and organizations, in Canada and elsewhere, offer powerful principles for building back better from the COVID-19 crisis. These often focus on putting people’s health and well being first and addressing the underlying conditions of racism and exclusion that create and exacerbate vulnerabilities in the first place. The Black Lives Matter movement, and a new resolve to confront systemic racism directed at indigenous people in Canada, have helped focus attention on achieving more equitable health, employment and educational outcomes for racialized and vulnerable populations. Another prominent criterion, supported by the federal government, is the extent to which stimulus funds support a rapid transition out of fossil fuel dependency. This is buoyed by detailed evidence showing that investments in a renewable energy transition have demonstrably more positive impacts on job creation than investments that prolong dependency on fossil fuels.  

Principles consistent with a just and green recovery are already reflected in the City’s recent Climate Emergency and Housing and Homelessness Emergency declarations. They offer guidance as does the Equity and Inclusion Lens created by the City Manager to help departments be consistent and coherent in the delivery of City services. Other recent decisions by Council also point the way ahead. For example, the top priority defined in the draft Transportation Master Plan is to reduce automobile dependency. It signals a direction for the city’s future, and offers a criterion Council can use now and in the next budget for rational, transparent and transformative decision making. Logically, cuts and deferrals should fall hardest on programs and projects already diverging from or incompatible with the realities we must confront and the future we want. Otherwise, Council will have missed a significant opportunity to show leadership at this decisive time in history, and signal to both provincial and federal governments where its priorities lie. Only then can the City expect to leverage its own modest resources to secure available and planned federal and provincial stimulus funds. 

Authenticity of intention matters to funders, and to the residents of Ottawa. If you expect community support for provincial and federal aid to municipal budgets then I suggest you demonstrate what building back better from the COVID-19 disaster would look like for Ottawa and its municipal budget, this year and next. 

Best Regards,

Daniel Buckles

“Is there some combination of fear and hope sufficient to dissolve our culture-wide conspiracy of denial or must we rely on some ‘staggering ecological disaster’ to wake a world of sleep-walkers.”  - W.E. Rees, 2020

On Jul 14, 2020, at 17:16, Stephanson, Wendy <Wendy.Stephanson@ottawa.ca> wrote:

Good Afternoon Mr. Buckles,

Thank you for your inquiry below, the Mayor has asked I respond to your inquiry. 

The City has updated Council on several occasions regarding the impact of COVID-19 on our Finances. 

On June 24, as Chief Financial Officer, I provided Council with an update on the financial impacts of COVID-19 on the city's finances. Like other cities across the country, the City of Ottawa is facing some real financial challenges because of the pandemic. The biggest impact of COVID-19 is to the City’s revenues with a projected loss of $241M to year end due to the shutdown of some of our services, cancellation of programming and the unprecedented drop in transit ridership have all resulted in significant revenue losses for the City.  In addition, the City faces $77M in additional costs responding to the COVID-19 pandemic in our community and we have received approximately $37M in funding from other levels of government. To date, the City has mitigated $89M in expenses and these include:

· Savings from closing our facilities (utilities, etc) -  $16M

· A reduction in fuel costs - $2M

· Reduced Presto Fees from Transit  - $5M

· Lower Equipass and ODSP ridership - $4M

· Implementing a discretionary spending pause across the organization - $20M  

· 4,280 part-time employees were placed on Declared Emergency Leave - $22M

· Significant reduction of our Summer Student program - $7M

· Savings from delay in staffing vacancies - $9M

· Other such as reduced overtime, etc - $4M

While we were able to find the savings from a multitude of areas and programs, the City is forecasting a deficit of approximately $192 million by the end of 2020. As presented to Council on June 24th, three guiding principles were developed to assist staff in the financial mitigation strategies to fill the gap.  They are as follows:

\The first guiding principle - One Time Solutions 

· Implementing one-time solutions that address immediate financial pressures and do not have long-term impacts on the City’s financial sustainability.    

· One-time solutions are best for one-time problems and don't impact the City’s financial sustainability future years.  

· They provide for flexibility and a right sized response to our immediate problem without long lasting effects.  

The second guiding principle – Balanced Approach 

· Using a balanced approach that ensures the delivery of statutory and mandatory services citywide and considers the Term of Council priorities 

· It recognizes that some of the mitigation strategies are over a longer period of time as the City cannot deal with them immediately  

· The principle also provides the flexibility to implement the mitigations with a view in terms of what is known about provincial and federal assistance 

· Staff are reviewing the Corporate Strategic Plan including revisiting each term of council priority to see what is still feasible in the new COVID reality 

The third and last guiding principle – Transformational 

· Implementing transformational changes to improve how the City offers services now and, in the future 

· COVID has changed how the City does business creating a need to assess what future service delivery looks like 

· Provides a view into the City’s service delivery to year end and into 2021, which will inform the 2021 budget and future service offerings 

I presented a combination of solutions spanning various programs and areas across the City with guidance of the principles noted above.  These solutions ensured that the City can continue to provide service to residents and respond to evolving community needs. Solutions to fill the gap are numerous, span various areas and programs across the city and include:

· Use the parking reserve to cover parking related gaps

· One-time use of a portion of the Hydro Dividend

· Use of the 2020 Contribution to the Tax Stabilization Reserve  

· Staffing pause to year end

· Use of funds from the City’s annual capital close exercise

· Deferrals of Capital Projects

· Borrowing from Reserves

The various mitigations will be tabled in two parts to Committee and Council for approval,  the first being the capital close and the second being the remainder of the solutions. For the deferral of capital projects we looked at those that had not started, tendered or were dependent on other capital works.  The report in August will detail these.

The importance of Climate Change to the City and the community was noted in the Council presentation and, as a result, it was recommended that $500,000 from the Hydro Ottawa dividend continue to be directed to our Climate Change efforts. Staff in the Climate Change and Resiliency team are developing a prioritized spending plan for Energy Evolution, which will be finalized once the financial mitigation strategy is approved by FEDCO and Council in August.  

The financial mitigations are in the absence of Provincial and Federal Funding. If we are successful with our advocacy with the Provincial and Federal governments and receive funding to cover the City’s deficit, we won’t need to implement all the financial mitigations. Residents can advocate to the Province and Federal government seeking assistance to offset our COVID deficit.  As you can understand, it’s been a very challenging time for the City, including our finances.  

Best Regards,

Wendy

From: Daniel Buckles <dbuckles@sas2.net Sent: July 08, 2020 11:39 AM To: Watson, Jim (Mayor/Maire) <Jim.Watson@ottawa.ca> Cc: Stephanson, Wendy <Wendy.Stephanson@ottawa.ca>; Willis, Stephen <Stephen.Willis@ottawa.ca>; Leiper, Jeff <Jeff.Leiper@ottawa.ca> Subject: Budget reprofiling

Dear Mayor Watson,

I understand that you have instructed the City’s Planning Department and Finance Services Department to present solutions to the forecast 2020 deficit. Please outline for me and the public the criteria and weighting being used to guide the budget reprofiling. This is needed because proposed adjustments of this scale must reflect explicit public policy objectives, including the Climate and Housing and Homelessness Emergencies declared by Council this term. Budget cuts, deferrals and use of the sizeable City reserve, while an unfortunate consequence of the COVID-19 emergency, cannot be treated as an internal accounting exercise. Budget reprofiling of this scale is an exercise in public policy and consequently requires a reasoned, transparent and justifiable basis for decision.

I also understand that a draft proposal, to be tabled at FEDCO and Council in August includes a 75% cut to the City’s only dedicated climate action plan. This very modest climate plan is ready for implementation and is a matter of the utmost urgency considering the dire consequences of the current climate trajectory. There may very well be other items in the budget reprofiling proposal, or absent from the proposal, that should be considered in light of established Council priorities. For example, is the Strandherd project of $113 million, which is primarily a car and fossil-fuel oriented investment, included among the cuts and deferrals? Can the proposal consider digging deeper into the City’s reserves to conserve plans and priorities put in place as a result of the Emergency declarations of this Council? If not, why not?

Governments at all levels around the world, and many members of the public, have clearly flagged as a priority a commitment to build back better when investing in COVID-19 recovery. For example, the Federal Government and most advanced economies in the world have been clear that they intend to use current budgets and economic stimulus funds and policies to quickly transition out of fossil fuel dependency while also addressing the underlying conditions of racism and social exclusion affecting our society. Part of the reasoning is that investments of this nature have demonstrably more positive impacts on job creation than investments in a destructive fossil fuel future.

We should all expect and receive transparency, progressive leadership and reasoned decision making from municipal authorities, especially on matters of significant public policy. For this reason, please immediately make public the criteria being used to guide the budget reprofiling process, and engage with Council and the public in discussion of the policy priorities reflected in these criteria. Otherwise, you will have missed a significant opportunity to show leadership and a commitment to people at this time of multiple and inter-related crises. 

Sincerely, 

Daniel Buckles, PhD.

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