City of Ottawa posts $44.5 million budget surplus in 2024

Ottawa City Hall (CTV News Ottawa)

The City of Ottawa posted a multi-million-dollar budget surplus last year, mainly due to higher investment income.

A report for the finance and corporate services committee shows the City of Ottawa ended the 2024 budget year with a $44.475 million surplus.

The City-Wide Tax-Supported services budget ended the year with a $55.683 million surplus, rate supported services - water and wastewater services - ended the year with a $6.157 million surplus, the Ottawa Public Library Board ran a $1.9 million surplus and the Ottawa Police Service ended 2024 with a $2.44 million surplus. The surpluses were offset by a $21.7 million deficit in the OC Transpo budget due to lower ridership and an increased use of discounted fares.

“The adoption of strong financial policies, plans and processes continue to support the City’s prudent approach to financial sustainability for today and for the future,” staff said in the report for the April 1 meeting.

“As reported regularly throughout 2024, staff implemented several financial mitigations such as a discretionary spending freeze and non-priority operational hiring pause, early in 2024 to risk mitigate against several financial challenges, specifically related to Transit’s path to financial sustainability, supported by Council. These early management interventions and risk mitigations resulted in significant financial improvements throughout 2024.”

The report shows Ottawa’s 2024 budget was boosted by multi-million-dollar surpluses in the “Corporate Common Expenditures and Revenues” budget and “Tax-Related Expenditures and Revenue.” Staff say the $50.374 million surplus in the “Corporate Common Expenditures and Revenues” budget was due to higher investment incomes.

“Although modest interest rate reductions were implemented between June and December, larger expenditures, including LRT holdbacks, were deferred until the latter part of 2024,” staff said. “Consequently, cash reserve balances remained elevated, yielding investment income that surpassed budgetary expectations for 2024. In addition, there were increased penalties and interest revenue collected on Tax and Water accounts.”

The Tax-Related Expenditures and Revenue budget posted a $12.3 million surplus due to “lower taxation rebates and remission expense and higher (payment in lieu of taxes) revenues.”

“There was a surplus in payment-in-lieu of taxes due to increased Airport Passenger Count revenue, driven by post-COVID-19 airport recovery, the annual municipal budgetary tax increase and prior year’s settlements on properties with disputes (unrelated to the fairness campaign),” according to the report.

The city saved $2.874 million due to staffing shortages and savings in purchased services.

Ottawa’s Emergency and Protective Services Department posted a $3.4 million deficit due to fleet repair and maintenance costs, increased Workplace Safety and Insurance Board claims and overtime and an “accident-related settlement,” according to staff.

The city’s Recreation, Cultural and Facility Services department posted a $3.4 million deficit due to a shortfall in Aquatics, Specialized and City-Wide Programs for higher maintenance and compensation costs.

City staff say the 2024 surpluses will “continue to strengthen the overall City’s financial strength and path forward,” noting any surpluses are added to reserves.

“These surpluses along with the updated minimum and maximum balances for several of the City’s reserves will provide and support a number of financial strategies that will be presented as part of the updated Transportation Master Plan, Long Range Financial Plans, the potential ongoing impacts of tariffs and other macro economic factors that may impact the City’s various financial plans.”

OC Transpo

OC Transpo cut $4.6 million in payments to Rideau Transit Maintenance due to performance deductions last year.

The Transit Service posted a $25 million operating deficit in 2024.

“The main cause was a $45.2 million revenue shortfall, with $31.4 million attributed to reduced federal gas tax and operating reserve debt servicing funding required due to unissued debt, and $13.9 million due to lower than budgeted ridership and increased use of discounted fares,” staff said.

The report shows the revenue shortfall was offset by $20.1 million in savings through the delayed opening of O-Train Lines 2 and 4, lower debt charges and reduced spending on diesel fuel.

Some savings were also found when OC Transpo and RTM reduced service on O-Train Line 1 for maintenance last year.

“In 2024, O-Train Line 1 performance deductions amounted to $4.6 million, which were offset by $1.2 million in costs for replacement bus service,” staff said.

Funding the OC Transpo deficit

The City of Ottawa is dipping into its reserves to cover the $21.7 million OC Transpo deficit.

Council is being asked to approve transferring funding from the Tax Stabilization Reserve to cover the cost of the transit services budget shortfall.