The City of Ottawa may slash funding to its economic development agencies as it tries to cope with budget pressures.

In an interview, Mayor Bob Chiarelli said every expense will be on the table as the city tries to absorb a $126-million shortfall.

"With upwards of a $120-million shortfall, we are going to have to look at what some people think are core services and some people think aren't," the mayor said. "But economic development is always a priority of mine and will always continue to be."

City staff will begin deliberations for the 2004 budget this fall, but the mayor and councillors have indicated everything is on the table.

The city currently provides $5 million in transfer payments for both capital and operational funding to the Ottawa Life Sciences Council, the Ottawa Tourism and Convention Authority and the Ottawa Centre for Research and Innovation.

The agencies' budgets have already been cut by seven per cent each this year. At the end of May, they narrowly escaped having their funding cut completely, as the city reopened its 2003 budget to deal with a $23-million shortfall caused by the provincial property tax system.

Michael Murr, the city's director of the business development branch, said it is appropriate everything is being scrutinized. "There has to be some very hard decisions. I think the economic development agencies do fully appreciate the fiscal pressures that the city is under," he said.

"From our branches' perspective, these are investments. The agencies create that economic climate that allows the businesses to be successful and hire more people. The mayor and the broader members of council do see these as investments, but this is a function of the fiscal pressures the city is under."

The agencies use the city's funding as seed money to attract additional investment from the federal and provincial governments and the private sector.

However, OLSC president Ken Lawless is not concerned.

"We have to justify our existence like anybody else," he said. "It's up to us to show the worth of the program and why we're beneficial to the city. The OLSC is an investment and council has to take a long-term view of that. I'm confident that our record speaks for itself."

OCRI president Jeffrey Dale sympathized with the city's predicament.

"OCRI's budget is less than one tenth of one per cent of the city's total budget. It's not a significant component," he said when asked if he is concerned about budget cuts. "We understand what the mayor is going through. Calm heads have to prevail because the city is in a revenue crisis ... I believe that the business community and the city need to make sure that the three levels of government sit down and talk about this."

OTCA interim president and COO Keith de Bellefeuille Percy said he's not worried.

"It's not even on our radar screen," he said, adding he has confidence in the mayor's and council's attitude toward economic development. "It's been proven as part of the city's economic strategy."

— By Kate Chappell