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OTTAWA — City council’s current commitment to keeping property taxes to a 2.5-per cent increase until 2014 may delay necessary sewer upgrades going forward, a city official warned Monday.
Dixon Weir, the city’s general manager of environmental services, told council’s environment committee that although the rate-supported water and sewer budget can cover the costs of the planned infrastructure program, he raised some doubts as to whether there’s enough money in the tax-supported budget to pay for the road reconstruction included in the projects.
“The concern is whether there will there be the tax-side funds able to continue,” Weir said. “If not, we’re in the process of doing a consequence review — a risk review — to see what would be the consequence of deferring or delaying that for a few years.”
As expected, the environment committee passed the draft budget that sees the water and sewer rate increase by 3.9 per cent in 2011, translating into an additional $24 a year for residents who already pay an average of $639. This year’s water and sewer budget comes in at $264.4 million, a $20-million increase over last year that requires the approval of full council.
By law, the water and sewer operations must be paid for by rates charged directly to homeowners, which is why its budget is completely separate from the one that determines property taxes. Rates have gone up dramatically over the past few years, mainly because the city has been upgrading aging pipes and sewers, as well as investing in a five-year plan to keep sewage from spilling into the Ottawa River.
Indeed, rates were to rise by nine per cent this year, but higher-than-expected demand for water in 2010 from non-residential users allowed the city to cut the planned rate increase by more than half without cancelling any projects.
But the problem Weir is warning about has to do with the property-tax budget side of things.
So-called “integrated infrastructure programs” are ones that include water main, sanitary and storm sewer upgrades, as well as road reconstruction. This work is usually done at once, which makes sense. For example, the $45-million Carling Avenue reconstruction project slated to start in about a month will include replacing a water main that serves 400,000 people and installing new sewers, as well as repaving the road, creating cycling lanes fixing the road, constructing new sidewalks and improving landscaping at the same time.
All the road construction in the project — in fact, anything that doesn’t have to do with water and sewers — is paid for out of the city’s operating budget, which comes from property taxes.
But Mayor Jim Watson’s pledge to keep taxes to 2.5 per cent for the next three years may make it difficult to afford road-related parts of planned projects.
The transportation department budget forecasts $79.9 million will be spent on infrastructure services in 2011, but that drops to $24.8 million in 2012 and further in 2013 to $17.8 million. The 2011 expenditures include projects that were accelerated due to the federal and provincial stimulus programs meant to boost the economy during the 2009-2010 recession.
Weir declined to specify any particular projects that could find themselves on the chopping block, adding that he will “identity if there is a risk” to delaying projects during council’s long-range financial planning discussions to be held later this year.
About one-third of Ottawa’s watermains are over 40 years old, and almost 100 kilometres are more than 80.
Councillor Maria McRae, who chairs the environment committee, said that figuring out what budgetary pressures will do to future infrastructure projects is “a discussion council has to have. We have to find out if this council, in the subsequent budget, should be putting more money into those integrated programs.”
She said she’d be in favour of increasing the budget for the road construction, but stopped short of saying she’d support a tax rate higher than 2.5 per cent.
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