Understanding Municipal Budgets
Given my interest in getting folks to better understand what is happening in their city, I am heartened to see some new engagement efforts from our local municipalities around city budgets.
The City of Kitchener created this video that offers a great overview of what’s involved in budgeting for a city’s services. The video notes that Ontario cities receive 9% of all taxes collected but are responsible for over 50% of the infrastructure. Kitchener is responsible for 47 core services. Also, provincial regulations require that all municipal budgets are balanced, meaning all money coming in must equal all money going out. Therefore, cities can not run deficits.
Kitchener has created several other short videos with information about its budget, including:
The City of Waterloo also has a video on its budget process. While much of the information in this video is very similar to Kitchener’s budget video, it does include some information specific to Waterloo. It notes that Waterloo provides over 100 services to its residents.
Budget Basics:
A capital budget covers new investments or replacing assets such as roads, city facilities, or buying new vehicles that are under the city's control.
The operating budget covers the day-to-day activities such as fuel, insurance, utilities, supplies and salaries.
Municipal budgets are guided by the Core Consumer Price Index Policy which states that CPIX acts as a guideline for tax increases. The year over year Consumer Price index for Canada in August 2022 was 7.0%, down from a 7.6% increase in July and an 8.1% increase in June, which was the largest year-over-year increase since January 1983. Year-to-date inflation is at 6.8%.
We are a two-tier municipality. That means the Region of Waterloo is an upper-tier municipality and Cambridge, Kitchener, and Waterloo are lower-tier municipalities. For every tax dollar collected (including federally and provincially), only nine cents goes to the municipality. Locally, the Region receives six cents of that and each city receives just three cents. This means that both your local municipality and the Region will have separate property tax rates and increases. This chart from the Region’s draft budget presentation (pg. 32) demonstrates how local municipal taxes are divided up.
The City of Waterloo shared the following chart which shows an average Ontario family with two annual incomes earning $129,872 combined and are paying $50,582 in taxes. You can see the breakdown of taxes to each level of government.
In addition to property taxes, residents also pay utility rates. Any utility rate changes are often noted as an individual rate, over and above the property tax rate. The City of Waterloo’s website states that, “The average household consumes 17 cubic meters of water per month.”
Waterloo also provides a snapshot of how revenue is dispersed amongst its various services. The majority goes towards fire services and municipal enforcement.
If you’re anything like me, that’s enough budget information to take in at one sitting! One area of the Region’s budget that I have not really mentioned is the police budget. Given that 32% of the Region’s property tax levy is dedicated to funding police services, it’s worth looking into more closely - which I hope to do this week and report back to you with more details soon.
Excellent summary. It is abundantly clear that discussing any significant aspect of municipal affairs is pointless without full consideration of the federal and provincial dimension. Each sphere is distinct, and they all require a measure of autonomy to function effectively, but they are also interdependent, and therefore essentially inseparable from one another. So I'd like to suggest one minor revision in your text: Instead City vs. Region, make it City vis a vis Region. The same goes for any "level" of our democratic order in relation to any other: city, region, province, confederation. They all serve and represent us, the people. In essence, they ARE us, co-existing within a defined geographic area as a "body politic." The so-called "higher" spheres only represent more of us, across larger portions of the land. The many have no inherent superiority over the few other than simply being more numerous. These bodies aren't in competition with one another, nor is any sphere in charge of any other. The goal for all constituent elements is an integrated, harmonious order that serves, represents and makes room for engagement from any and all of us while also leaving us free to find and fulfill our personal purposes.