The first official 2025 budget meeting for Grey Highlands council ended with elected officials leaving with some homework to complete over the holidays.
On Dec. 11, council held a committee of the whole budget meeting to begin the process of setting the municipality’s budget for 2025.
The three hour session concluded with council agreeing to look for operational savings that could in turn be plowed into the municipality’s chronically underfunded capital budget. Members of council were sent home with the task of identifying potential operating cuts and service reductions in order to beef up the capital budget.
The scenario of trading operating savings for capital spending emerged after Deputy Mayor Dane Nielsen suggested council start the budget process with an eye towards drastically increasing the capital budget. Nielsen raised the idea of a 10 per cent local tax hike strictly to add to the capital budget, which combined with operational increases in the draft budget of 6.23 per cent would effectively mean council would be considering a 16.23 per cent overall local tax increase as a starting point.
Coun. Paul Allen countered that he could support Nielsen’s efforts to increase capital spending if council agreed to examine possibilities of trimming five per cent from the operating side of the equation to lower the overall increase.
The rest of council didn’t object to this course of action and agreed to return to the next budget meeting, scheduled for Jan. 7, with ideas to trim the operating budget.
Council has been aware in recent weeks that difficult budget decisions were coming soon. Earlier in the month, staff indicated a local tax increase of more than seven per cent was coming just for operating expenses.
At the Dec. 11 budget meeting, that number had dropped to 6.23 per cent as the province had announced financial relief for municipalities facing rising costs for OPP policing. Even with the extra money from the province, the municipality is facing a number of financial pressures.
Notable operating increases include:
- Reversal of one-time funds used to lower the tax increase in 2024 - 2.2 per cent
- New debenture repayments - 1.7 per cent
- Wage grid and payroll changes - 1.6 per cent
- Policing increases - 0.6 per cent
- Insurance for liability and property - 1.1 per cent
The starkest numbers council faces were in the capital budget. Staff explained that the capital side of the budget has been underfunded for years and the municipality has fallen way behind on its asset management.
“There’s no windfall. There’s nothing we can tap into that we’re not already doing,” said CAO Karen Govan. “The reality is: we’re getting further and further behind. The inflationary impacts that are affecting municipalities are staggering.”
The capital budget recommended $11.3 million in spending. Of that total, more than $8.9 million in projects did not have funding sources. Grey Highlands has just over three million dollars on hand for capital spending (between reserves and the amount in the tax levy for capital spending), which left $5.8 million in recommended capital spending with no financing source.
In addition, the 10-year capital budget showed that $90 million in spending is required to maintain infrastructure in the municipality.
“There is a significant cloud looming over Grey Highlands,” Nielsen said after the review of the capital numbers.
Coun. Dan Wickens agreed and said council is feeling the consequences of “kicking the can down the road” in previous budgets.
“This isn’t going to be a popular budget,” said Wickens. “We’re going to have to start working for the future.”
The capital numbers prompted Nielsen’s suggestion of a 10 per cent local increase - which would be just over $1.5 million in new cash that when added to the existing $1.6 million in the tax levy for capital would give the municipality $3.1 million for capital projects.
Nielsen acknowledged that they couldn’t fix the underfunded capital budget all in one year, but said they had to start.
“I do believe we need to have a significant bump in our capital levy to start tackling some of these projects,” he said. “It isn’t easy to suggest what I suggested. It isn’t going to be well-received in the community.”
Nielsen’s suggestion found traction around the council table and Allen followed with the suggestion that such an increase be accompanied by corresponding operating cuts.
“If we’re going to look at that kind of increase in capital, we need to look at reducing our operating,” Allen said. “We’ve got to look at the whole picture if we start going down that road.”
Coun. Nadia Dubyk said she could support the initial concept of a 16.23 per cent increase, noting that it equated to approximately $364 per year on a home assessed at $300,000.
“It allows us to dive in and start to prioritize,” she said.
McQueen called such an increase “unacceptable.”
Before agreeing to the Nielsen/Allen plan, council asked McCarthy what a 16.23 per cent local increase would look like on an overall tax bill in Grey Highlands with Grey County (the county’s preliminary budget numbers to be discussed on Dec. 13 forecast a 3.13 per cent increase) and the school board factored in.
McCarthy said a 16.23 per cent local increase combined with 3.13 per cent for the county and zero per cent for the school board was a 10.09 per cent overall, blended tax increase or $391 per year for a home assessed at a value of $300,000.
