Budget 2025 Annual Update

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The multi-year budget has seen tax increases that are higher than we have been historically used to in Chatham-Kent, and this has been for a variety of reasons, both economic and social. 

Due to many global pressures, Canada, like the rest of the world, has been through a period of high inflation, leading to large increases in the Municipality’s cost of providing services. The budgeted inflation falls a year behind that published by the Bank of Canada, and so this remains an impact throughout the remaining term of the multi-year budget.

Another ongoing impact to the tax increases faced by the Municipality is our investment in our infrastructure. Chatham-Kent is a large geographic municipality with a low population density and has many capital requirements, but our current Asset Management Plan indicates a significant shortfall in the amount required to maintain our infrastructure at it’s current level of service. To combat this the tax increases include not only inflation to keep up with the increasing construction costs, but also a 1.5% tax levy approved by Council to try to close the infrastructure funding gaps.

Chatham-Kent, along with all municipalities across Ontario, is facing many social issues driven by the homelessness crisis, exacerbated by a lack of affordable housing. To help combat this crisis, and without any funding forthcoming from senior levels of government, this budget includes funding to tackle all aspects including shelter, housing and public safety.

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By the end of 2024, there will be $0.5m of tax-funded debt remaining for Riverview Gardens that will be paid off in 2025, $4.2m remaining on the debt for the John D. Bradley Centre with it expected to be paid in full in 2033, and $11.6m remaining on the debt for PUC with it expected to be paid in full in 2030.

Elsewhere the Municipality has $182k of tax-funded debt remaining with regards to Social Housing, this is also expected to be paid in full in 2033.

This and other debt information can be found in the Operating Budget Summary of the Approved 2024-2027 Budget Book starting on page 86. 2024-2027 Approved Operating Budget Book

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There are no costs associated with the community hub built into the 2025 tax increase and no costs for the remaining years of the multi year as the cost of the build would be from reserves and/or debentures. The space designed for both the library and museum is greater than the current space occupied by both and therefore we may see an increase in the operating costs (heat, hydro, cleaning) even with a more efficient building and therefore would need to address any potential operating cost increase as part of the 2028-31 multi-year budget.

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A significant number of the Municipality’s reserve funds are set aside for a specific purpose, either legislated or at the discretion of Council. They are a major part of the Municipality’s fund balance and are a critical component of the Municipality’s long-term financial plan. To that end money has been set aside for capital asset lifecycle, growth, special projects, and new initiatives – to fund future planned or unanticipated projects and for the repair and maintenance of existing municipal assets to ensure they do not deteriorate over time. 

 The approved 2024-2027 multi-year budget contained projects with over $275m of spend on capital assets, with $196m being funded by municipal reserves, a further $24m from PUC reserves, and $57m from grants or subsidies. 

 Unfortunately the expense doesn’t end there. The Municipality’s current Asset Management Plan show’s that we are only 50% funded for our core infrastructure. This means that we are only putting aside enough funds to maintain half of our current assets to a standard to keep providing the expected level of service. To help close this infrastructure funding gap and ensure the continued upkeep of all the Municipality’s current assets, Council has approved an annual infrastructure levy of 1.5% of taxes, plus inflation on existing contributions to keep up with the rising costs of construction.

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The Provincial and Federal Governments are downloading costs onto all property taxpayers by ignoring their responsibilities and not increasing funding of any portion of our infrastructure needs over the last decade and not funding the social issues of homelessness and affordable housing and the increased emergency services response required. If the upper level governments would properly fund these costs from income taxes, Chatham-Kent property tax increases would fall to inflation levels, which would be more affordable for fixed income pensioners.

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The Council Approved Multi-Year Budget for 2024-2027 indicated that budget increases would be 8.17% in 2025, 7.70% in 2026 and 7.30% in 2027, for a four year average of 7.17%. The reason for the abnormally large increases is in response to a couple main issues. Chatham-Kent is receiving minimal help from upper levels to address infrastructure challenges and property taxpayers are facing increases of almost 3% annually to deal with the backlog. The Asset Management Plan is currently being updated, but with recent construction inflation taken into account, there is likely little relief to come without upper level help. The second issue is what I call social issues, such as affordable housing, homelessness, and the increased emergency services required, resulting in over 2% of the increases. These costs should be funded by Provincial and Federal coffers, but are also being downloaded onto municipalities. If the upper level governments would fund the social issues and even half of the infrastructure increases required, property tax increases would fall back below 3% or around inflation while still supporting Council Strategic Directions.