Budget pressures and opportunities

Each municipality is unique, and how one city builds their budget does not always work for another.

In Waterloo, for example, we look for as many opportunities as possible to apply for grants and other funding opportunities from other levels of government. Sometimes that requires us to have funding already in place for our portion of a project; in order to secure additional funding, we need a shovel-ready project that we can move quickly on. While this involves capital costs, a city capital investment of $10M can potentially be leveraged into a grant opportunity for an additional $25M, providing a greater overall benefit for our community.

It's been over 20 years since the RIM Park Investment Reserve was established to offset the lease liability of RIM Park, another unique Waterloo situation. To ensure that residents of Waterloo would never have to pay more on RIM Park, investment interest surpluses and, since 2012, the first $200,000 of any year-end property tax operating surplus have been allocated to this reserve. While there are still a few more years of payment left, thanks to these previous efforts we’ve accomplished the goals of the reserve and have enough funds available to meet the obligation which ends with the final payment in 2031.

The surplus from the RIM Park Investment Reserve can now be used to support other priorities without additional pressure to the property tax base. Examples include funding the equipment needed for Winter Sidewalk Maintenance enhancements, our planning litigation fund to help manage more complex planning/development matters proceeding to the Ontario Land Tribunal, and an increased electric vehicle charging program.

In addition to pressures unique to the City of Waterloo, we are also facing challenges that many cities have, where decisions made by other levels of government have shifted various cost burdens to the City. We have chosen to continue providing or funding programs that were previously funded by or delivered by other levels of government, in support of our community priorities, but many of these pressures are being felt as part of our 2024-2026 municipal budget.

• Increased planning responsibility – the increased responsibilities for planning at the local level puts pressure on the City in terms of timelines, potential penalties, and increasing complexity of development applications which may see matters proceeding to the Ontario Land Tribunal, but is in support of the housing objectives of our Complete Community priority.
• Increased annual contribution to Waterloo EDC – with federal and provincial funding being phased out by higher levels of government, the City is phasing in an additional contribution to Waterloo Economic Development Corp to grow a diversified economy and innovation ecosystem, one of our Innovation and Future-Ready objectives.
• City funding support to Ontario Health (LHIN) programs – provincial funding levels have not kept pace with program cost increases, so the City of Waterloo has been increasing funding support of the program to ensure these valued older adult programs continue at their current service level.
• Frozen provincial payments-in-lieu of property tax ("heads and beds") – the province provides municipalities a payment-in-lieu of property tax on behalf of post-secondary institutions and hospitals (referred to the “heads and beds tax”). The current rate of $75 per bed has been in place since 1987. The City's portion of this is 34% (the rest goes to the Region of Waterloo). If this rate had kept pace with inflation since 1987, the 2023 rate would be approximately $165 per bed, an annual increase in revenue for the City of about $1.8M