Municipal Income and Spending

When new housing is built, developers bear the majority of the initial costs of providing the needed additional service infrastructure -- roads, water and sewage handling systems, parks, fire stations, etc.. But the municipal government is responsible for maintaining and replacing this infrastructure.

A comparative picture of development costs versus revenues for the City requires some modelling assumptions, so the specific surplus or deficit numbers may not be exact. But the overall picture that emerges is valid. Intensification via development in higher-density urban areas is, on average, the most cost-efficient for the City, while urban greenfield development and low density rural development are likely costing the City more than is returned in taxes and service rate fees. A key reason is that urban development is more dense so requires less infrastructure per household. Moreover, urban properties typically have higher real-estate value, so taxes are higher.

With about 17,000 employees, the City is Ottawa's second largest employer after the federal government.

Much of Ottawa's budget goes towards the basic infrastructure and services that keep things running (e.g., transit, drinking water treatment and distribution, sewage collection and processing, and police), and to programs that are provincially mandated. Many of these budget items are covered not by property taxes, but by users charges (fees and fares) and transfers from other levels of government.

Notwithstanding the many considerations and constraints that apply to municipal spending, its sheer size makes the City's procurement of goods and services a potentially highly important tool for stimulating the local economy and fostering innovation.

The property tax rate is set by City Council each year as part of the budget. This rate, multiplied by the value of the property, constitutes the main part of the tax on property. An additional element is the education tax, whose rate is set by the province. Certain services —  including water, sewer and garbage —  are funded by rate-based charges, and are not tied to the value of the property.

The City of Ottawa has kept annual property tax rate increases below 2.5% for each of the past eight years. Nonetheless, Ottawa has the highest residential property tax rate among Canada’s six largest cities. Actual average property taxes are higher in Toronto than Ottawa due to the higher property values in Toronto. Ottawa’s commercial property taxes are also relatively high.