As part of their financial plan, municipalities set the capital and operating budgets each year by taking into consideration their government-mandated responsibilities, maintaining service level standards and their community’s priorities. These documents are the blueprint that outline the where money will be collected and spent in line with the municipality’s priorities and level of service according to their vision and mission statements, values and long-term strategic plan.
The Capital Budget covers long-term investments in the purchase, construction, maintenance and repair of physical facilities and infrastructure such as road repairs, bridges, libraries and parks that are funded by water and wastewater fees, property taxes, government grants and long-term debt and are paid off over time. In Ontario, municipalities can incur long-term debt to fund capital projects (ie. run a deficit).
Compared to personal budgeting, this is the equivalent to buying a new car, furniture, or building an addition on the house.
The Operating Budget covers the ongoing, day-to-day expenses that the municipality incurs to provide programs and services to residents including items such as staff salaries (planning, departments, pensions), emergency services (police, fire and EMS) and water, social services and parks and recreation that are funded primarily by property taxes ($110 million), water and sewage fees In Ontario, municipalities are required by legislation to balance their operating budgets. Expenses must equal revenues every year and cannot borrow money to fund operating expenses.
Compared to personal budgeting, this is the equivalent to buying groceries, electricity, and insurance premiums.
Financial Statements are prepared annually at year-end and reviewed by an independent auditor. All Statements must be in compliance with the Public Sector Accounting Standards for local municipalities.
The capital and operating budgets as well as financial statements must be made public so that residents can see how council is allocating and spending funds.
Capital budget example
The following is the 2021 capital budget for the City of Belleville, Ontario that totaled $36.9 million.
What projects are funded?
- Road, sidewalk, bridge, traffic infrastructure reconstruction and maintenance – $22.7 million
- Parks, playgrounds, trails, dog parks, monuments – $5.1 million
- Fleet and equipment – truck, tractor, mower replacements – $2.2 million
- Water services maintenance and equipment – $2.3 million
- Wastewater maintance and equipment – $2.9 million
- Servers, software, networks, system security – $652,000
- Police supplies – speed gun, transcription system, photo analyzing program, fleet vehicles – $632,000
Where does the funding for these projects come from?
Sources of financing for these projects include:
- User rates – $12.68 million
- Water – $7.1 million
- Wastewater – $5.35 million
- Parking – $225,000
- Taxation (ie. operating budget) – $5.67 million
- Reserve funds – $6.2 million
- Development charges
- Casino revenue share ($3.3 million in 2019)
- Government grants (eg. Ontario Community Infrastructure Fund, Investing in Canada Infrastructure Program) – $4.3 million
- Canada Community-Building Fund (Federal Gas Tax) – $3.54 million
- Provincial Gas Tax – $446,000
- Long term debt – $3.98 million
- Taxation – $3.68 million
- User rates – $300,000
- Donations – $22,000
Operating budget example
The following is the 2021 operating budget overview for the City of Belleville, Ontario that totaled $162.6 million.
Where does the revenue come from?
The services in the budget were funded by the following sources:
User pay
17.64% is contributed by the following user rates:
- Water – $16.6 million
- Wastewater – $11.3 million
- Parking – $750,000
Taxation
The remaining 82.36%, or $133,931,500 was contributed by the following:
- Property taxes – $108 million
- User fees & service charges – $15.1 million
- Other taxation – $3.6 million
- Development charges – $1 million
- Municipal Accommodation Tax on short term rentals – $750,000
- Dividends from electrical utility – $969,000
- Investment income – $400,000
- Conditional grants – $379,000
How are the funds spent?
Expense categories from largest to smallest include:
- Emergency services – $39.3 million
- Police – $22.8 million
- Fire – $12.5 million
- EMS – $4 million
- Environmental services (water, waste) – $33 million
- General government (council, admin, taxation, property management, human resources) – $18.2 million
- Recreation (parks, arenas, fields, community centres) – $13.4 million
- Social & family services – $10.9 million
- Transportation operations (roads, traffic) – $9 million
- Debt – $8.4 million
- Planning & development – $8.4 million
- Capital projects – $8 million
- Social housing – $5.3 million
- Long term care – $3.2 million
- Library – $2.34 million
- Social services – $2.34 million
- Engineering – $1.2 million
- Public health unit – $1.1 million
- Garbage – $1 million
- Conservation – $785,000
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