Region staff projecting tax hike

Increases to offset rising costs of fuel and soaring inflation could mean $132 per homeowner

WATERLOO REGION The rising cost of gas and soaring inflation rates are significantly impacting the Region of Waterloo, so much so that staff suggests a tax hike of more than six per cent could be on the table for next year.

“It’s a hugely challenging projection,” said finance commissioner Craig Dyer.

The region is anticipating an overall projected shortfall for the 2023 budget of $4 million to $6 million, he said. “There is a lot of work to do between now and the fall,” said Dyer, who will present a preliminary budget report to regional councillors at a committee meeting Tuesday.

Dyer said the shortfall amounts to a 5.5 to 6.8 per cent tax increase. The staff report says one per cent of the tax levy is about $6.3 million, which translates into a $22 tax hike for the average regional homeowner.

And, if at least six per cent is needed, that would mean many more dollars, up to $132 per homeowner, Dyer said.

Despite the heightened concern, Dyer said there are reserve monies that can be used to offset some of the budget shortages but it won’t be enough.

“This is why we have stabilization reserves to deal with these unexpected events,” he said.

The region has $15 million in COVID-19 funding from the provincial government as well as $15 million in its own reserves. The COVID monies must be used for shortfalls due to the pandemic, while the region will use some of its reserve money this year.

Dyer said deficits are unusual for municipalities. Locally, the region has been in a surplus position since 2000.

Dyer said inflation projections were in the range of two to three per cent but it has soared to 6.8 per cent, a 31-year high.

“This is a highly unusual situation with this level of cost of inflation just to keep doing what we are already doing,” Dyer said.

A big contributor to the regional budget shortfall is the soaring fuel prices, which impact the regional vehicles that use fuel to run. Service contracts are also more costly because of increased gas costs.

The region is projecting a shortfall of up to $9 million by the end of this year in fuel prices alone.

“If fuel prices remain, we anticipate $7.5 million to $9 million range (loss) and the majority of that relates to transit,” said Dyer, referring to Grand River Transit and its 260 buses which use diesel fuel.

The region has access to provincial gas tax of about $3.7 million, which can offset some of the added costs.

The region’s 2023 budget will include about $10.5 million spent on adding affordable housing, boosting transit levels and increasing paramedic staff and ambulances.

Other revenue shortfalls include airport user fees.

The region had anticipated about 782,000 passengers travelling this year out of the Region of Waterloo International Airport.

However, with lockdown restrictions earlier this year, fewer people were travelling.

The region is still expecting to see 500,000 passengers travel in and out of the Breslau airport, but the revenue shortfall could be as much as $3 million, Dyer said.

Another impact on the budget is the encampment at 100 Victoria St. Dyer said the region is spending about $80,000 a month, most of it on security to monitor the area where residents are living in tents. Security also monitors washrooms across the street at St. John’s Kitchen.

Other budget costs include $400,000 in enhanced employee wellness initiatives for the region’s 4,000 employees. The wellness initiatives include strengthened mental-health benefits and resilience and coping sessions.