Mayoral candidate McKenney's fiscal plan gets former PBO's stamp of approval
Joanne Chianello | CBC News | Posted: October 6, 2022 8:08 PM | Last Updated: October 7, 2022
Detailed plan released to back up 3% tax cap, while Sutcliffe promises hike of up to 2.5%
Mayoral candidate Catherine McKenney's plan laying out how they'd run the city on a property tax increase of three per cent per year received an official stamp of approval from Canada's former parliamentary budget officer for its "high level of transparency" and "accountability."
Back in early September, McKenney committed to keeping the annual tax increase to three per cent — like outgoing Mayor Jim Watson has — and promised to present a fully costed platform. That document was released Thursday morning.
"The financial plan we've shared today is the most comprehensive ever released by a Canadian mayoral candidate," McKenney told reporters. "We also think it's the most credible assessment of city finances that you will hear during this campaign."
Kevin Page, the founding president and CEO of the Institute of Fiscal Studies and Democracy at the University of Ottawa, was Canada's first parliamentary budget officer. He stated McKenney's financial plan "sets a high standard for fiscal transparency."
Page is not endorsing McKenney's policies, nor did he work on their fiscal plan — that work was led by Neil Saravanamuttoo, former chief economist of the G20's Global Infrastructure Hub, and Tyler Meredith, who used to head fiscal and economic policy for Prime Minister Justin Trudeau and finance ministers Chrystia Freeland and Bill Morneau.
Instead, Page's statement indicates McKenney's plan is based in financial and economic reality.
"Key economic and fiscal assumptions, sources, and uses of funds and debt sustainability considerations are clearly laid out," stated Page. "This high level of transparency promotes policy debate, accountability and trust."
Thursday was the second day this week that key candidates have released their fiscal plans. Mark Sutcliffe announced Wednesday he'd keep the property tax increase between two and 2.5 per cent for the next two years. As part of his plan, he said he'd find $35 to $60 million in efficiencies, including eliminating 200 positions through attrition.
McKenney scoffed at that idea.
"Even Jim Watson knew that we couldn't keep a two per cent tax increase without serious cuts," McKenney told reporters.
"Is there any small bit of waste somewhere? Of course, we're always going to look for that. But is there $60 million in efficiencies at the City of Ottawa? Absolutely not. Jim Watson would have found that and we would have had a tax decrease."
Sutcliffe wasn't too impressed with McKenney's plan either, calling it "extremely risky."
"It raids our city's reserves, adds significantly to our debt, and will dramatically undermine the financial stability of our city," said Sutcliffe. "We're putting the city in a vulnerable position to achieve Catherine McKenney's priorities, which are not the priorities of the vast majority of Ottawa residents."
McKenney's plan earmarks $210 million to cover inflation, assumed to be an average 2.7 per cent for the next four years, and assumes a 1.4 per cent growth in population. They said they will allocate new revenue from growth to growth projects.
"I will not strip that away and put it toward other departments," said McKenney. "So our capital budgets that go toward roads will increase with our population growth."
McKenney's three-per-cent tax increase — plus growth and other normal revenue the city takes in — would account for an additional $24 million available after accounting for growth and inflationary pressures. McKenney would fund their campaign promises with three additional sources of revenue. They include:
- Using $90 million from the discretionary reserve funds to cushion the effects of inflation, which the Bank of Canada believes will return to normal levels by 2024. At the end of 2021, the city had discretionary reserves of $583 million, well above the city's own guidance levels.
- Using debt. McKenney plans to issue a $250-million green bond in order to build 25 years-worth of cycling infrastructure in the next four years. As McKenney has previously explained, the annual servicing of the debt would be paid by the $15 million the city already spends every year on cycling. This would make the debt cost-neutral on an annual basis. Although taxpayers would pay tens of millions in interest, McKenney argues the city will get more infrastructure now before construction becomes more expensive. As well, McKenney would issue another $65-million green bond to retrofit city buildings. The retrofit would pay for itself within eight years in energy savings, according to the campaign.
- Accessing federal money. McKenney is promising to secure $119 million the federal government is offering to municipalities directly through the Housing Accelerator Fund and the Active Transportation Fund. None of these funds would be available until at least 2024, and the funds are not guaranteed.