I am a bit fascinated by Ottawa's Debenture Committee, not because it decides anything interesting, but because it's where the rubber meets the road after Council makes a spending decision. On the way in we can debate if a decision is a good idea or not - such as spending $154m for Lansdowne. But it's on the way out at Debenture Committee that we discover what council really authorized was "borrow $154m, pay $6m in interest yearly for 40 years, and ultimately pay back $330m when it's all done".
In other words, pay double. Fascinating - am I right?
It gets better when you consider how exactly Ottawa is going to pay that money back: property taxes(*). The $6m of interest and $1.8m in principal a year has to come from somewhere. My back-of-the-napkin calculation says the average house in Ottawa will pay an additional $23 in property taxes in 2014 for Lansdowne. Of course there is no average house. I'll be paying more than that given I'm in Kitchissippi and my home value rises faster than the average in Ottawa. But for the sake of argument, let's stick with $23 for everyone.
How does $23 more in 2014 relate to past increases? Is it a lot?
Our current Council has been happy to trumpet the 2013 budget increase of 2% as evidence of fantastic management. No doubt they'll do it again given the planned 2% target for 2014.
Here's the thing. An example urban home saw an increase of $67 in 2013. So the pending $23 increase for Lansdowne is already going to eat up about 34% of next years "low low 2% increase".
We already saw problems with the 2013 budget where critical programs were affected. With the Lansdowne costs eating up so much of next year's 2% increase - aren't we headed for cuts to other programs?
Mayor Watson has claimed the 2% increase for 2014 is warranted because inflation was lower than anticipated. Well, rebuilding Lansdowne isn't something StatsCan puts in inflation reports.
Given the fact (well, my best guess anyway) that a big chunk of the 2014 tax increases will be used to pay for Lansdowne - aren't we headed for service cuts everywhere else in order to stick to an "inflation based" 2% budget increase?
(*) Astute readers will remind me that technically the Lansdowne costs are going to be repaid not by raising taxes on residents, but by redirecting the increase in property tax revenue from Lansdowne itself to the debt. Yes yes, technically this is correct. But that's a financial shell game. Those property taxes should be used to pay for the roads, bridges, sewers and other infrastructure Lansdowne users will use over its lifetime. So while the Lansdowne property taxes are paying off the debt, you and I will be paying more to pay for those roads, bridges, sewers and whatnot. Ergo: we're still paying.