Councillors divided on ‘infrastructure levy’ option to help ballooning funding gap

Ottawa city staff are floating the idea of introducing an infrastructure levy on tax bills to fund projects, but councillors are divided.

Ottawa city councillors are divided on the idea of an infrastructure levy on property tax bills.

The finance and corporate services committee heard from city staff on ways to help address a multi-million-dollar gap in the infrastructure budget over the next ten years.

One option – a tax that would help fund infrastructure.

“It’s a tax. You can call it whatever you want to call it. It’s an incremental tax. So, if you want to mark that for infrastructure funding, it could be as simple as on the back of the tax bill. There could be a line that says infrastructure levy and that will be there,” said city treasurer Cyril Rogers.

“The other option is it becomes part of the blended rate, still taxed. At the end of the day, there’s only one taxpayer. It’s a tax.

Rogers says a one per cent infrastructure levy would add $46 a year to the average property tax bill.

He told committee it is up to councillors to decide whether it will be introduced or not.

College Ward Coun. Laine Johnson says she needs more information on how different areas of the city would benefit.

“Infrastructure funding gaps that we see is already being felt by residents of College Ward,” she said. “I’m not seeing a solution for those problems in this report.”

Johnson says she worries the report could have winners and losers.

“I would be anxious to support an infrastructure levy that doesn’t show me the value in my outer urban wards,” she said.

“I still need staff to come back and explain to me how mature neighborhoods are not the losers in this conversation, and I haven’t had that yet.”

The City of Ottawa introduced a capital levy in 2008, generating $20 million to address the funding gap for renewal needs. The levy has not been applied since 2009.

Capital Ward Coun. Shawn Menard would consider supporting such a levy but says it needs to be targeted towards specific infrastructure.

“It depends on if it’s targeted towards basic infrastructure and making sure that those things are funded, then I would absolutely consider it. The issue right now is that the way the city is going, we would fund something like a ‘really nice to have’ like a Lansdowne development or more expansion driven boundary. We got to get those things under control first and then and then talk about funding basic services.”

Some councillors called an increased tax a burden to residents.

“I don’t think that residents should be paying more to get the exact same amount. There are other things that we can be doing in the city to be ensuring that we’re spending money judiciously,” said Orléans East-Cumberland Coun. Matt Luloff.

Luloff points to additional funds coming from the upload of Highway 174 from the province.

“I’m looking forward to the province making good on those commitments and I think that that would reduce the infrastructure gap by a large amount. I think that the story that many people are missing is how much that infrastructure gap has shrunk over the course of this term of council,” he said.

Beacon Hill-Cyrville Coun. Tim Tierney says he is “dead against any new tax” and called the idea a “visionary exercise.”

Staff point out that Toronto, Vancouver, Hamilton and Mississauga have introduced infrastructure levies or “other forms of earmarked revenue to address their growing infrastructure deficits.”

Could be an issue in the upcoming municipal election: Sutcliffe

Mayor Mark Sutcliffe says other levels of government need to come through for the municipality before he supports an infrastructure tax.

“I’m always going to look for those solutions before I default to increasing people’s taxes, especially during an affordability crisis,” he said.

“We do need to invest in infrastructure, and I don’t think the discussion today or in the future is going to be about whether we invest in infrastructure. We have a plan to close the gap over the next ten years, a responsible, sustainable plan to close the gap. The question is just going to be, how do we do it?”

Sutcliffe suggested this could be an election issue when voters head to the polls in October.

“I’m sure it will be part of the conversation,” he said.

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