I do not think that the City of Ottawa uses the correct budgeting process, and this is one the main causes of tax increases.
For example, the city's operating budget has increased 38% from 2002 to 2010, but services have NOT gone up 38% in that same time period.
Ottawa's long term debt has also increased to $1.6 Billion dollars. This amounts to a yearly debt charge of $100 million dollars each year. This debt is too high and it shows that costs are out of control at the City of Ottawa.
The City of Ottawa uses a form of budgeting known as Incremental Budgeting.
A brief definition is: Allocation of financial resources is based on previous year’s budget plus or minus an increment (usually plus)
Inflation is easily accommodated through an increment over last year’s budget.
While new spending items can be easily added older items are seldom reviewed.
The problem with the current methods are that it:
On the other hand, I propose a system called “Zero Base Budgeting".
All expenses must be justified for each new period. Zero Base Budgeting starts from a “zero base” and every function within an organization is analyzed for its needs and costs
No item appears in a new budget because it was in the last year’s budget.
Allows staff and council to question assumptions and allows for review of all or some programs each year.
Every item in the budget must be reviews based on:
The main positive features of this system are:
You can contact Michael Kostiuk using the following methods:
Last Update: October 5, 2010.