Jim Watson, Candidate for Mayor
Address at the Churchill Seniors Centre
Remarks on Taxes and Finances

June 24, 2010

Check Against Delivery

Dear friends,

I am delighted that you are able to be here today to share with you some important thoughts about the approach I would take as your Mayor when it comes to budgeting and property taxes.

This is the second in a series of major policy commitments I will be making over the course of the campaign – just a few weeks ago I was pleased set out my approach to boosting our economy and prosperity.

A Mayor, as chair of Council and Chief Executive Officer for the City, should always be central to the decisions about the taxes and fees that people are asked to pay for their municipal services.

These taxes and fees are the foundation of local government.
Standing guard on budgets is the single most important part of the Mayor’s job.

The Mayor sets the tone - establishes realistic goals with Council - and makes sure that these goals are achieved.

Right now we have a City budget adrift and it is simply not good enough. We need change - and we need it now.

Over the years I have found that the watch words for success in fiscal prudence are Priorities and Leadership.

Unfortunately over the last few years we have had neither and seeing the result in this City has only reinforced my convictions about the importance of a good Mayor’s leadership in setting clear priorities.

Right now, City hall is trying to be all things to all people.

And when everything is a priority, you really have no priorities.

Each of us in our own daily lives has to make tough decisions.

Especially over the past few years of the recession we all know that we can’t afford everything we would like.

City Hall has to learn to do the very same thing:
Set meaningful priorities and stick to them.

At home we save for critical things, like a new roof, before we spend money putting a pool in the back yard.

We ensure that we can afford the essentials before we spend or borrow for stuff that is “nice to have”.

Let’s start with Priorities.

It is the Mayor’s responsibility to understand what is truly
important to the public and for the City.

It is the Mayor’s job to put forward a budget to Council that is in line with these priorities.

In the absence of clear priorities, the way is quickly lost in a hail of demands, pressures and unforeseen events.

New ideas that may be worth pursuing get lost in the deluge.

Without clear priority-setting there is acrimony and disappointment.

When expectations run wild, conflict at Council can be the only result.

Without clear priorities, capital budgets get bloated and hard choices are avoided in a way that quickly spirals out of control.

So let me set out how I believe things need to change.
First we need a responsible and reasonable commitment from the Mayor on property taxes.

The problem is not being committed to predictable taxes and fiscal restraint.

The problem is making irresponsible commitments and doing nothing to fight for taxpayers after earning their trust.

So I will be clear about what I think we can achieve in spending restraint and to limit property tax increases.

I will keep the tax increase to a maximum of 2.5% each year I lead Council.

That’s about half the annual increase of the last three years.
Let me be crystal clear:

I am committing to a maximum annual tax increase of 2.5% because I believe that is a responsible commitment that is AFFORDABLE, PREDICTABLE and PROTECTS our valuable public services.

For comparison, the current Mayor voted for tax increases over the last three years of 4.9%, 4.9% and 3.8%.

Over the last three years, that is an average hike in your residential taxes of 4.5% - almost twice the rate of inflation. For the average homeowner that represents an over $400 increase in property taxes – a far cry from zero.

We’ve seem some effort to spin this of late but the truth is on public record.

Restraint to a predictable 2.5% will mean absorbing some fiscal pressures internally and making some tough choices.

It will involve holding feet to fire.

It will involve working all year to stick to the fiscal plan we establish together.

Ladies and gentlemen, let’s not kid ourselves. It’s hard work and I will work from the day after the budget is passed to prepare for the next year.

I make this commitment – with great seriousness - after carefully looking at the fiscal picture.

Even with one vote at the Council table, I will take it as a personal failure if we do not meet this commitment every year of the term of the next Council.

I will fight tooth and nail for this.

I WILL NOT GIVE UP.

I will be IN YOUR CORNER.

And I WILL deliver a 2.5 rate for the people of the City of Ottawa – while protecting and bettering valuable public services.

Now I hope in several years to do even better than I can commit to today.

Achieving this commitment will take collaboration with managers and with Council – it will take strength and diligence to make all the decisions that will add up to a predictable budget.

We will need to go through all of the pressures, challenge the status quo and question conventional wisdom.

In some areas, it will mean doing more with less, cutting waste, innovating and making changes that improve the services people count on every day.

Once we have a fiscal plan in place we’ll respect it and I will stand guard to maintain its integrity.

That means if we add new expenses or projects during the year we’ll have to forgo spending we had hoped to include.

A budget is not a budget when it is not respected and enforced.
That’s just common sense, in your home, business or in running your city.

If you don’t fight against budget creep in all its forms, then you can be sure that you’ll be quickly overwhelmed and have you up against the wall when it comes time to pay the bills.

Zero tax increase is simply not practical without doing serious damage to the services we count on and need.

The bottom line is: people want to maintain good City services.

Large organizations need a strong hand to stay focused on their purpose and achieving results.

Large organizations tend to bloat without determined effort and leadership.

For the last four years we have had erratic leadership and we’ve paid for it with higher taxes.

On the other side of the debate is a candidate who refuses to commit to fighting tax increases at all – allowing only that double-digit tax increases would probably be too much.

Friends, let me put it bluntly: Promising to keep tax increases below the double digits is NOT leadership.

Let’s take a second to do the math.

That could mean an almost 40% tax increase over 4 years!!!

Neither of these gentlemen are serious on the issue of taxes and you deserve better.

There are plenty of areas of spending that should be reviewed.

There are countless examples of poorly planned or ill conceived spending over the last few years that I don’t believe should have been approved.

Let me highlight just a few things I won’t be doing as your mayor.

I won’t cost the City money by recklessly breaking existing contracts.

Our municipal word needs to mean something again.

Canceling the light rail fixed price contract that would now be nearing completion was a horribly expensive mistake.

It cost us over $100 million dollars altogether, which by any measure is a massive amount of money - and we have nothing to show for it.

In practical terms, that’s $285 for every single household in the City of Ottawa sent down the drain.

Wasted. Blown. We will never see that money again.

I will not try to sneak in tax increases through the back door by massively increasing user fees for important city services the way the current city leadership has over they last three years.

In my first year in office I will undertake a thorough review of all user fees that are paid in the city and set out a reasonable, predictable track for those fees for the next five years.

Nor will I engage in a serial blame game for failure, pointing to anyone and everyone to avoid admitting the truth.

I will also not make snap decisions to buy things “on sale”.
The City bought a huge number of busses recently in just a few days – 226 of them at a cost of over $155 million – because another city – Chicago - had cancelled its order.

These articulated buses are made by New Flyer.

The new buses would largely replace other buses also bought from New Flyer between 2001 and 2004.

Some buses that are only SIX year old, made by this same company, are due for costly repairs and the city claims that their engines are now obsolete.

On the Monday, through the City Budget, we had a set plan to replace busses on a schedule and by the Friday we’d made the largest order of buses in a decade.

It was not proper and it was not sensible.

We accepted buses that had been specified and ordered in Chicago.

We accepted that we would buy these buses from New Flyer despite concerns about the performance of buses we’ve purchased from them in the past and without allowing other suppliers to compete.

Perhaps this was the right thing to do – perhaps – but I don’t believe this rushed arrangement was much of a deal or the right choice for the city, especially when we are now pursuing a light rail system.

I will also not support spending millions to eliminate bus bays that speed traffic in a misguided attempt to punish drivers leaving them fuming in their cars.

Eliminating these places for buses to pull out of traffic is not a priority area for spending precious infrastructure dollars.

While we talk about transit, I can’t help but mention the new Bus Garage – dubbed by many as the "Garagemahal".

Here is a project with a $51m estimated price tag that now has cost us at least $97m.

Now there are some good reasons why the price tag has gone up – an increase in size, the decision to computerize the fueling system – but that is not the point.

How can a city budget effectively when it doesn’t know the true cost of the projects that it commits to?

And just yesterday, the City Auditor General showcased another example of cost overruns, when the Automated Bus Call System increased by 150% from $6.7 million to $17 million.

Where was the leadership and oversight that would have prevented this project from swirling out of control?

My approach will be very different.

I will be active in our financial planning.

I will force the hard questions and drive for better service at lower cost.

There are some obvious places to start saving money.

I don’t understand for the life of me why some common sense proposals that have been on the table got rejected at Council.

For example, a perfectly reasonable proposal by the Auditor General to raise the factor of bid price from 10 points to 30 points when hiring consulting engineering services got rejected.

Now that proposal would have saved about $4 million a year and done a lot to break up the lock a few firms have on doing city work.

Half measures and resistance to change once again won the day and we left half of those savings on the table.

There are other savings to be had in outside services.

The sad situation on legal services at the City is a real problem for example.

It results in paying huge bills to outside lawyers for routine services, like negotiating a contract for service, that should be well within the competency of the municipality’s own legal staff.

Litigating against residents, like the recent example of the war fought against the family who want to cut down a tree in their front yard that is destroying their home’s foundation, is out of control.

We need to renew our legal department with the senior staff that posses the judgment and strength to put us back on an even keel.
And make no mistake this is a big ticket item that can save big money.

I would also attack the absentee problem at the City and set a goal of reducing it by at least 10%.

Right now the cost of employees calling in sick has been pegged at about $27 million a year.

Managing absenteeism is a basic job.

But it does require coherent leadership and respect for our employees, so showing up for work is not so dispiriting.

And it does involve actually putting in place a plan to reduce this costly cultural decline at the City.

With the right effort and resolve, we can save over $2 million annually.

These are but a few examples of some of the areas where we can start to save money – because when the City saves money, it can redirect those funds to important areas of need and growth, like transit and social housing.

Saving money is not just about saving money for the fun of doing it – it’s not just old fashioned parsimony – it’s about using limited tax dollars in the most effective and innovative way to meet the City’s own priorities.

My approach is to lead a Council that keeps its eye on the budget throughout the year and to avoid unpredictable clashes at budget time.

Working to keep taxes down is a never-ending task that requires open thinking, courage and hard work.
And we owe it to the young family that is saving for their first home.

And to the elderly widow who is shocked as her tax bill rockets year AFTER year to the point where it challenges her ability to stay in her own home.

We also owe it to the tenants in our City, because a 4.9% tax increase puts significant pressure on Landlords to raise rental rates.

For some, higher property taxes are an irritant.

For others, higher taxes are the difference between making their monthly budgets and not making it.

I get that.

I understand that’s not always where the media is and it won’t always be where some of my colleagues on Council will be – but frankly I don’t care about that.

What I care about is the community I know and love in all its diversity.

And part of loving that diversity means understanding that not everyone is in the privileged bubble that looks at property taxes as an inconvenience.

For some it is far more than that and I will look out for them because by doing so I am also looking out for the sustainable future of this great city and this community that has given

Priorities are important. So is leadership.

I say leadership is critical because Budget time is the single most important test of a Mayor.

This City has had to endure four terrible years of financial wandering when people had voted for strength.

Look at the first budget approved by the current Council.

The Mayor was totally absent from the debate after having made his irresponsible “zero means zero” promise.

Not only did he promise to freeze taxes and user fees, he even promised – can you believe it - to freeze residential tax assessments over four years!

By now, it should be clear to everyone in our City that the incumbent will say and do absolutely anything to get elected or re-elected.

When I was Mayor in the late 1990s’, I would have loved to be in a position where the Provincial Government was uploading tens of millions in services and creating tax room for municipalities.

That wasn’t the case.

At that time the City and the Region absorbed tens of millions of dollars in tax pressures, yet we were able to hold the line on taxes.

Can you imagine for one minute if the current Mayor did not have the benefit of Provincial uploading? - our taxes might be going up 7, 8 or 9%!!!

Now we would all love to have a zero tax increase each year – who wouldn’t?

The current Mayor’s central campaign theme was nothing more than a gimmick to get votes.

It was a slogan – he had no plan to implement his “sacred promise” and the last four years have proven that.

We all know that in reality it costs money to provide the services that our city great deserves.

And it costs more money every year to do so.

We want better services and continuous improvement.

So it is at Budget time the honest and pragmatic leadership from a strong Mayor is especially important.

In the first budget debate, the Mayor was all but missing in action.

The day after the election the commitment to zero tax increase and zero rate increase was gone.

Nobody rolled up their sleeves and worked with Council. In fact it was Councillor Hume who, to his great credit, in the end had to effectively take over the process and fashion a budget.

And look at this year’s budget.

It was hailed as a triumph by the Mayor for about 24 hours before he took to the airwaves and declared it a disgrace, even though he voted for it!

I think it was probably somewhere in the middle, another botched opportunity because of a lack of leadership.

We managed, in a largely staff led process, to put forward an almost 4 percent tax increase and a 9 percent water rate increase.

At least that was a smaller increase than the 4.9 percent the previous two years.

One of the Mayor’s signature commitments went up in smoke without any sign that he cared or that he took it seriously.

Council lost what was left of their faith in the Mayor last year as he bounced around from one position to the next.

Zero creativity. Zero working together. Zero leadership from the top.
And in this case zero truly did mean zero.

We so badly need a change.

We SO BADLY need a return to serious leadership and clear priorities.

We need to work together with mature consistency.
I have set out today a clear commitment to predictable tax levels.

This is a very important statement to me personally, not only to be clear with voters about what to expect, but because I do understand the role of the Mayor.

After years of budget drift, I consider the financial health of the City as job one.

I will fight each day to keep property taxes down.

In closing, let me restate my tax policy in the clearest way possible.

I am committing to a maximum annual tax rate of 2.5% that is AFFORDABLE, PREDICTABLE and PROTECTS our valuable public services.

Together we can, and we will, do much better.

Our families, our seniors, our moms and dads, our tenants, our local businesses are counting on us to get the ship back on course;

And to get our great City of Ottawa moving once again, proudly, in the right direction.

Thank you!