
Well, it is that time of year when municipalities discuss budgets. This is a brief overview of the municipal budget process and how budgets impact local residents and taxpayers overall.
Example of a Local Municipal Budget
Havelock Belmont and Methuen (HBM) are first up to tackle their primary budget discussions. The township has posted the 2025 Departmental Operating Budget Review in the documents along with the Agenda. The document thoroughly reviews each Department’s Gross Operating Budget Expenditures. Notably, Administration (17%) and Policing (16%) are the two most significant expenditures.
Several items have put a great deal of pressure on HBM’s 2025 net tax levy, as associated draft tax rates, including the following:
- OPP Policing cost increase $215,209
- Insurance $45,000
- Estimated effect of inflation $108,150
- Doctor Recruitment Initiatives $15,000
- Additional Yearly Cyber-Security Audit $46,151
- Increase in Economic Development Activities $15,000
- HR outsourcing vs. hiring with HR legal expertise $27,644
The total of these items is $588,038, or the equivalent of a 7.5% increase in tax rates, compared to the proposed increase of 6.0%.
Taxpayer Frequently Asked Questions
Do Yearly Property Taxes Pay for Everything in our Budget?
Unlike the federal and provincial governments, municipalities do not receive a portion of income or sales taxes. Municipalities in Ontario rely primarily on property taxes for revenue. In any given year, funding for operations and capital needs comes from taxation, government transfers, reserves and reserve funds, user fees, and departmental operating revenue.
What are Operating Expenses?
Operating expenses are those outlays of funds for the day-to-day, ongoing expenses that a municipality incurs to provide programs and services to residents and visitors, including staff salaries and wages, emergency services, police, water, public works and recreation. Capital expenses also support the provision of services, but they are for tangible capital assets (TCAs), which have “useful” lives that stretch beyond one calendar year. The cost of these TCAs is split, or “amortized,” over their useful life following generally accepted accounting principles (GAAP).
What a Residential Property Owner Pays For
Residential taxpayer funds, by division, for each 100,000 of assessment. For example, a property owner with a $250,000 Residential assessment would pay $144.85 for Fire Services in a year ($250,000 divided by 100,000 times $57.94).
Each department has its operating budget, which makes the municipality budget whole.
Let’s take a closer look at some of the key areas of a Budget:
Administration
The Administration department is responsible for managing and coordinating the municipality’s operations. This includes functions such as human resources, finance, information technology, and legislative services. The Administration budget accounts for 17% of the HBM Municipal Budget noted above, making it one of the most significant expenditures.
Policing
Policing is a critical service provided by municipalities, accounting for 16% of the total HBM municipal budget noted above. The OPP Policing cost increase of $215,209 is a significant driver of the overall budget pressure, representing a substantial portion of the total $588,038 in additional costs.
Infrastructure and Public Works
Maintaining and improving municipal infrastructure, such as roads, bridges, and water/wastewater systems, is a significant part of the municipal budget. This includes the material costs, equipment, and labour required to keep these essential services running.
Recreation and Culture
Municipalities often provide their residents with various recreational and cultural programs and facilities. This can include parks, community centers, libraries, and other events and activities. These services contribute to residents’ overall quality of life and can be essential in attracting new residents and businesses to the area.
Emergency Services
Fire, ambulance, and other emergency services are critical components of a municipality’s budget. These services ensure the safety and well-being of residents and visitors, and their costs can be significant, especially in larger or more populated areas.
What does all this mean?
The municipal budget is a complex and multifaceted document that reflects the priorities and needs of the community. By understanding the various components of the budget, residents can better appreciate the challenges and trade-offs that municipal leaders face in allocating limited resources. As taxpayers, staying informed and engaged in the budget process is crucial to ensure that the municipality is meeting the community’s needs in a fiscally responsible manner.
To find the budget presentation, click here: https://events.hbmtwp.
Written for you by:
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