Ottawa City Council Reviews $38.6 Million Q2 Deficit, Projects $11.2 Million Year-End Surplus

Ottawa City Council reviewed a second-quarter budget update showing a $38.6 million consolidated operating deficit through June 30, 2026, while staff projected an $11.2 million year-end surplus. The discussion focused on the cost of winter operations, OC Transpo's fare revenue shortfall, reserve levels, and whether budget assumptions—especially for transit ridership—have been realistic enough.

Topics Discussed

1. BUDGET UPDATE: Q2 deficit and year-end outlook

Council discussed File 4.1 - Q2 Tax, Transit, and Rate Operating and Capital Budget Status Update and Year-End Forecast. Staff said, "The city's second quarter position reflects a consolidated operating deficit of 38.6 million," but also said the "current full year forecast reflects a projected 11.2 million surplus."

Staff attributed the improved year-end outlook largely to investment income, surplus land sales, and mitigation measures across departments. In the same presentation, staff said the projected surplus was "mainly driven by our investment income" and that the city also had "a good pipeline of land cells [sales]" expected to close this year.

Councillor Cathy Curry cautioned that the projection was not guaranteed, saying, "Our current forecast is for 11.2 million consolidated surplus, but we are treating these projections with appropriate caution."

2. WINTER OPERATIONS: Snow costs drove early-year pressures

Winter operations were identified as the largest driver of the first-half deficit. Staff said winter operations finished the first half of the year with a $41.6 million deficit after 49 snow days, which they said was 29 per cent above the five-year average of 38 days, and 175 centimetres of snowfall.

Staff said those seasonal costs help explain why the city often shows a weaker position mid-year than at year-end. They noted that winter spending is concentrated in the first half of the year, while some revenues, including investment income, tend to arrive later.

Councillors also raised the question of whether the city's budget assumptions are keeping pace with actual conditions. Riley Brockington asked, "And at what point are we going to have budgets that are presented to the commission and council that have more accurate and realistic data to ensure that it reflects the reality? And this is an issue I've raised many times."

3. TRANSIT FINANCES: Ridership, fare revenue and provincial funding

Transit remained a major focus. Staff said the biggest pressure was fare revenue, explaining: "The key pressure in transit is fair revenue. So, the shortfall." They said ridership assumptions used when the 2026 budget was set have not been met.

Staff explained that when the budget was prepared, "actual transit ridership was in at 81 82%. So we established the budget in 2026 at 83%," but actual performance has fallen short of that target. The projected year-end transit deficit was put at $12.3 million.

Councillor Matthew Luloff pointed to another source of lost revenue, saying "broken fair boxes have led to a loss of more than half a million dollars, which is a bit of an own goal when it comes to not being able to reduce that transit deficit."

Council also discussed the city's push for provincial support tied to the transit upload. Glen Gower argued the city should keep pressing the province, saying, "We need to put as much pressure as we can to make sure we have equity in terms of our financial structure for the upload," and asked why Ottawa taxpayers should keep "paying for a system that no other city in the province is paying for."

Clarke Kelly said provincial funding alone would not solve OC Transpo's underlying problems: "The provincial dollars doesn't improve ridership. The provincial dollars doesn't improve fare evasion. We'll still have problems."

4. RESERVES, COST CONTROLS AND STAFFING

Staff said the city has been trying to contain spending through vacancy management and limits on discretionary expenses. On travel and training, Clarke Kelly said, "From a travel perspective, we're really trying to, you know, contain travel... We do a lot of training internally. We do a lot of training where the trainer comes to us."

Mayor Mark Sutcliffe said, "As I talked about during the budget setting process, the tax stabilization reserve is projected to end the year with a $89 million uh balance." Council also discussed staffing vacancies. Jeff Leiper asked, "How many positions are we currently not staffing? And then what is the value of that work?"

The discussion reflected concern not just about the current forecast, but about how much flexibility the city would have if transit pressures or winter costs worsen later in the year.

5. CAPITAL, UTILITIES AND OTHER AGENDA ITEMS

Council also reviewed the capital program and rate-supported services. Staff said the water, wastewater and stormwater programs were performing strongly and that the "projected year-end forecast is at $20.2 million surplus," which they said supports "the long-term sustainability of this critical systems."

Theresa Kavanagh linked some planning revenue pressure to the slower housing market, saying it was "attributed to the slower um housing construction," though she added that staff had seen "a big rise in uh building permits since April."

Kelly Clarke also flagged additional weather-related costs, saying "the public works deficit is forecast to be $29 million at the end of the year" and noting about $4 million in flooding costs on top of that.

Mayor Sutcliffe also reported that "the finance and corporate services committee just met in camera in order to receive an update on cyber security and the external threat landscape."

Motions

• File 4.1 - Q2 Tax, Transit, and Rate Operating and Capital Budget Status Update and Year-End Forecast — discussed; final vote outcome not identified in the provided notes.
• Brownfield grant application for 349 Danforth Avenue — discussed; final vote outcome not identified in the provided notes.
• Delegation of authority on acquisition and sale of land and property — discussed; final vote outcome not identified in the provided notes.
• Closed session cybersecurity briefing — no binding decisions were identified in the provided notes.

Attendees

Councillors and officials explicitly identified in the provided notes as present or speaking:

• Mayor Mark Sutcliffe
• Councillor Riley Brockington
• Councillor Glen Gower
• Councillor Jeff Leiper
• Councillor Theresa Kavanagh
• Councillor Matthew Luloff
• Councillor Cathy Curry
• Councillor Clarke Kelly