Ottawa Tourism's future is in doubt.

Last week, council cut the remaining $500,000 it provided the tourism outfit annually in its bid to deliver a city budget with a zero increase. Industry leaders and city officials, however, continued to hold out hope that a new relationship of some kind will emerge with the city from the ashes.

After years of reductions, what remained of an annual one-time grant to Ottawa Tourism was cut by councillors and a mayor eager to keep property tax increases as close to zero as possible.

"On the omnibus bill that was passed, our funding was not retained," said Jacques Burelle, president of Ottawa Tourism. "As of (Feb. 26), our funding is completely eliminated from the City of Ottawa. ($500,000 is) all that was left, and it's completely gone."

Ottawa is now unique among major centres in this part of Canada, he said. It will now rely almost entirely on the private sector to advertise its tourist sites, at least for the time being.

"Toronto (tourism) has $28 million at its disposal. Montreal has $25 million.

"It's a serious impediment to us. All the other tourism destinations are . . . way out ahead of us. They're not held back by their relationships with their cities," said Mr. Burelle.

The 2007 budget relied heavily on reserves and last year's surplus, yet was praised in some corners for not making cuts to health and social programs, the arts, and other municipal services.

Other business groups were spared as well: OCRI and the Ottawa Life sciences Centre retained their operating grant of $1.8 million as well as a capital grant of $1.25 million.

Ottawa Tourism, however, did not escape the tiny chopping block that remained.

"It was a package of decisions that were made," explained the city's manager of economic development Michael Murr. "In it, the motion included making eight sustainable budget reduction options that had been identified by staff. Included in those eight was one for Ottawa Tourism to (cut its funding)."

In the short term, Mr. Burelle said his group is in conversation with the city on an "exit plan," namely tying up administrative loose ends with the city after it pulled the plug.

"Postage, payroll slips . . . we've had a 35-year relationship with (the city)," he explained. "(We need) a month or two months to organize things."

In the long term, though, Mr. Burelle said an "openness" he detected from city officials has him mildly optimistic.

"I want to have more conversations with the city, to see if that's really the last act," he told the OBJ. "There seems to be some kind of openness to talk about things more. On the same token, I also don't want to create any false hopes."

Prior to the budget's adoption, Ottawa Tourism warned of the dangers of cutting its funding. Doing so, Mr. Burelle told council, "will result in significant staff layoffs, and (will) completely curtail the services Ottawa Tourism (provides) the city."

Asked if layoffs are afoot at the 31-employee Albert Street office, Mr. Burelle said he wasn't certain, at least for now. He wanted to hold talks with the Ottawa Gatineau Hotel Association (OGHA) and the city before making any pronouncements.

"Until then, we're not going to be making any great declarations on where we go from here," he said. "I think as a minimum, we will certainly have to change our structure a little bit. But it is still a little early to say."

There's still a chance that Ottawa Tourism could score some city dollars on a case-by-case basis, said Mr. Murr.

"From an economic development perspective, (the cut) is an unfortunate outcome of the budget," he said. "(But) we will still be able to work with Ottawa Tourism on a project-by-project basis. It certainly doesn't completely replace their core budget, but it goes some way in continuing to support the efforts of Ottawa Tourism."

As an alternative to municipal funding, it was suggested by city staff in the draft budget that Ottawa Tourism rely on the Destination Marketing Fee for all its needs.

The fee, also called the hotel tax, was launched three years ago by participating members of the OGHA. It currently nets some $6.5 million a year.

Ninety-eight per cent of that, Mr. Burelle said, went to advertise Ottawa as a tourist destination around North America. Only a small percentage went to cover operating costs for Ottawa Tourism that the city or membership fees didn't cover.

Now, a much larger portion of the fee will have to come from monies that used to go for marketing, if Ottawa Tourism is to remain at its current size and location.

Dick Brown, the OGHA's executive director, said last month that the city was attempting a backdoor method to get at the fee. An attempt by the city to take control of the fee failed in 2005, with Queen's Park saying no.

However, Mr. Brown echoed the hope that something positive will come out of the bad news so far.

"I remain hopeful that the city can find a way to remain a partner with Ottawa Tourism," he said. "Hopefully, next week we might have something more."

"There's still hope that, one way or another, we can further the conversation," Mr. Burelle added, suggesting that discussions on forming a public-private partnership (P3) were in the works even prior to the funding cut.

He said a P3 relationship would allow Ottawa Tourism to operate with the efficiency of a private firm while still benefiting somewhat from the public purse. Details, however, are scarce for now.

"There are certain services the city wants us to accomplish. There are certain things the OGHA want us to do. We know what they are," he explained. "The other impediment to us is our inability to plan long term. We know from our last few years, the DMF will generate $6.5 million a year. The difficulty that we have, is that the city runs on an annual basis, and the budget isn't decided into the third month of the year. That really holds us back."