Tax increase of 6 per cent possible, says CAO, unless money found by trimming budget costs
CAO Ron Taylor made it clear to council that local citizens could face tax increases of more than six per cent for the 2024 fiscal year – unless city departments can find significant savings.
Such savings might come from programs and services being altered, shelved or reprioritized, according to the CAO. Taylor said the city is looking at a $2 million shortfall in funding, largely driven by inflation causing up to “double-digit cost increases.”
Taylor believes that just to pay for the services the city now has it would require a 4.5 per cent increase for 2024. But when added to the capital levy of 1.5 per cent approved last year by council to ensure city infrastructure and assets are taken care of, the total municipal tax increase could come in at more than 6 per cent.
The task now, says the CAO, is to go through the budget and look for ways to reduce this possible increase.
The first budget that will come in for scrutiny will be the capital budget of $72 million, an increase of $14 million from 2023. The capital budget is defined as projects that are one time in nature and create or improve a city asset. Money allocated here is primarily spent on building and maintaining municipal infrastructure like roads, bridges, water and sewage facilities and public buildings like recreation centres and libraries.
As promised in the last municipal campaign, roads will remain a capital priority for the second year running with $33 million potentially allocated to road building and upgrades. Other capital improvement priorities include $25 million allocated for city facilities and infrastructure improvement, and an additional $14 million to purchase new vehicles for city departments.
The second proposed budget that may suffer cuts is the special projects budget, defined as items that are one time in nature that do not result in the creation or improvement of a city asset. This budget currently comes in at more than $2 million. Proposed special project spending for 2024 includes continued funding for downtown revitalization projects, computer hardware and software spending, rail trail signage and a number of city studies that are helping staff prepare for the phenomenal growth that Kawartha Lakes will experience over the next quarter century.
The final budget where savings will be looked for is the far more substantial operating budget, which comes in at $256 million, up almost $16 million from 2023. The operating budget is filled with items that pay for the ongoing delivery of more than 200 day-to-day city services. It funds the various city departments like public works, human services and police, fire and EMS.
In 2024, the city has proposed allocating 26 per cent of their capital budget to public works, 25 per cent to human services, 24 per cent for the police, the fire department and the paramedics. The remainder is to fund services like landfills, libraries and winter road services. Almost $143 million of this budget is taxpayer supported, while $75 million comes in transfer payments from the province and federal government.
Any kind of significant cuts to the operating budget could impact the delivery of city services like snow removal, fire protection, road improvements, public housing and parks and recreation programming.
Councillors asked many questions to Taylor and city treasurer Carolyn Daynes that suggest this could be a year where all city spending will be under scrutiny.
Councillor Dan Joyce wanted to know how the number of employees for Kawartha Lakes compares to other single-tier municipalities.
Taylor told the councillor that Kawartha Lakes staffing is “very low compared to other areas but is slowly expanding as the city invests more in human capital so that the city can grow.”
Councillor Mike Perry wanted to know from Taylor why the operating budget had grown 30 per cent since 2018?
“This is not a unique trend,” Taylor responded. “We rely heavily on provincial transfers and grants to help with programming. These costs are driven by inflation.”
Daynes added that wage increases, transfers to capital reserves, dealing with an asset backlog, pre-building for growth on the way and ramping up transfers to reserves have contributed to the 30 per cent increase since 2018.
The city has scheduled multiple different council meetings over the next two months to look at the budget. Time has been set aside for public input and advice regarding what taxpayers think an acceptable increase might be, and what programs and services the city should prioritize while other programs are scaled back – or even eliminated.