City's transit deficit not fully covered off by provincial grants

The City of Ottawa wasn't allocated enough funding in a long-awaited provincial announcement to fully cover off its anticipated $85-million transit deficit for 2022.

The Ontario government announced $505 million for municipalities on Wednesday to cover losses related to the COVID-19 pandemic.

The city had been anticipating that announcement for several months, especially after tabling a report in September that showed it expected the transit department to be short $85 million by year's end. Cities are not allowed to run deficits in Ontario.

• Transit deficit estimated to hit $85.5M in 2022
• ANALYSIS | The transit file will be tough for Ottawa's next city council

It had crafted a transit budget for 2022 based on ridership returning to 82 per cent of pre-pandemic levels, on average. Ridership hasn't come close to that level for the year, so the transit department is millions short on fare revenues.

Ottawa's chief financial officer Wendy Stephanson told transit commission in September she expected the hole would be fully filled when Ontario's funding came through, but learned it was allocated $63.3 million. 

"So we will have a shortfall," said Stephanson, who is now in the top job after interim city manager Steve Kanellakos's surprise resignation last week ahead of what turned out to be a scathing report from the Ottawa Light Rail Transit Public Inquiry.

"At this point we will address the shortfall through the transit operating reserve, so it should be able to be covered off."

If other municipalities don't use their allocations, Stephanson said Ottawa can apply for what they return to the province.

As they craft a budget for 2023, staff are assuming those COVID relief programs from upper levels of government will not continue.

As part of that budget, Mayor Mark Sutcliffe intends to freeze transit fares at current levels for one year, a promise he made during the municipal election that he expected would cost $5 million.

Stephanson also addressed the LRT inquiry's recommendations on Wednesday, promising to rebuild the public's trust in the city's public service.

City council also created a subcommittee that will be focused on oversight of non-operational issues related to Ottawa's existing LRT and construction on its second phase.