City of Waterloo 2024-2026 Budget

Thank you to everyone who shared their thoughts with staff and Council over the past several months.

City of Waterloo budget day is Monday, February 12, 2024, where Council will debate and adopt the 2024 to 2026 budget.

The revised council packet for the City of Waterloo budget meeting is now available, including the 2024-2026 Budget Day Memo which presents additional menu reduction opportunities for Council consideration on budget day. If approved, these options could reduce the overall tax rate impact of the budget. Tune in at 12:30 p.m. to hear staff present additional recommendations that could, if approved, reduce the overall tax rate impact of the three-year budget.

The full agenda and meeting link are available on the City’s website.

City of Waterloo engaged with the community on the staff tabled 2024-2026 budget by hosting a hybrid public information session and soliciting feedback through a survey. Session attendees and survey respondents included people from across the City and a range of age groups, but they do not represent a random or statistically representative sample. The opportunity for staff to engage with residents to share information and get feedback and comments is a valuable part of the budget process and provides an indication of public opinion for Council’s awareness and consideration. These engagement efforts also demonstrate the City’s commitment to operating with integrity and transparency, as we strive for well-considered comprehensive, responsive and thoughtful decision-making.

Staff report CORP2024-005 Community Engagement on the 2024-2026 Staff Tabled Budget will be presented to Council on Monday, January 29, 2024. The report can also be accessed as part of the revised council packet. Details for Monday’s council meeting are available on the city’s website, and you can also watch the meeting via our You Tube live stream .

Council continues to review the staff-tabled budget and welcome your comments. Final adoption of the budget is scheduled for Monday, February 12, 2024.

Each municipality is unique, and how one city builds their budget does not always work for another.

In Waterloo, for example, we look for as many opportunities as possible to apply for grants and other funding opportunities from other levels of government. Sometimes that requires us to have funding already in place for our portion of a project; in order to secure additional funding, we need a shovel-ready project that we can move quickly on. While this involves capital costs, a city capital investment of $10M can potentially be leveraged into a grant opportunity for an additional $25M, providing a greater overall benefit for our community.

It's been over 20 years since the RIM Park Investment Reserve was established to offset the lease liability of RIM Park, another unique Waterloo situation. To ensure that residents of Waterloo would never have to pay more on RIM Park, investment interest surpluses and, since 2012, the first $200,000 of any year-end property tax operating surplus have been allocated to this reserve. While there are still a few more years of payment left, thanks to these previous efforts we’ve accomplished the goals of the reserve and have enough funds available to meet the obligation which ends with the final payment in 2031.

The surplus from the RIM Park Investment Reserve can now be used to support other priorities without additional pressure to the property tax base. Examples include funding the equipment needed for Winter Sidewalk Maintenance enhancements, our planning litigation fund to help manage more complex planning/development matters proceeding to the Ontario Land Tribunal, and an increased electric vehicle charging program.

In addition to pressures unique to the City of Waterloo, we are also facing challenges that many cities have, where decisions made by other levels of government have shifted various cost burdens to the City. We have chosen to continue providing or funding programs that were previously funded by or delivered by other levels of government, in support of our community priorities, but many of these pressures are being felt as part of our 2024-2026 municipal budget.

• Increased planning responsibility – the increased responsibilities for planning at the local level puts pressure on the City in terms of timelines, potential penalties, and increasing complexity of development applications which may see matters proceeding to the Ontario Land Tribunal, but is in support of the housing objectives of our Complete Community priority.
• Increased annual contribution to Waterloo EDC – with federal and provincial funding being phased out by higher levels of government, the City is phasing in an additional contribution to Waterloo Economic Development Corp to grow a diversified economy and innovation ecosystem, one of our Innovation and Future-Ready objectives.
• City funding support to Ontario Health (LHIN) programs – provincial funding levels have not kept pace with program cost increases, so the City of Waterloo has been increasing funding support of the program to ensure these valued older adult programs continue at their current service level.
• Frozen provincial payments-in-lieu of property tax ("heads and beds") – the province provides municipalities a payment-in-lieu of property tax on behalf of post-secondary institutions and hospitals (referred to the “heads and beds tax”). The current rate of $75 per bed has been in place since 1987. The City's portion of this is 34% (the rest goes to the Region of Waterloo). If this rate had kept pace with inflation since 1987, the 2023 rate would be approximately $165 per bed, an annual increase in revenue for the City of about $1.8M

The City of Waterloo has a strong culture of identifying and implementing efficiencies, as well as undertaking continuous improvement efforts. The ongoing efforts of finding efficiencies and continuous improvements directly supports the City's ability to undertake additional work throughout the year. Indirectly, these ongoing efforts allow the City to offer enhanced service to taxpayers.

Efficiencies have been critical in order to continue to deliver services effectively while keeping tax increases as low as possible. City staff are committed to continuous improvements, collaborating with our neighbouring cities on joint service initiatives and looking for other innovative ways to identify efficiencies. The 2024-2026 staff tabled budget includes $1.6M (or 1.75% property tax savings) in efficiencies and improvements.

Efficiencies and improvements may fall into more than one theme:

• Effort leading to cost savings;
• Effort that is a quality enhancement/leads to enhanced service;
• Effort that builds capacity, repurposes resources, or avoids costs;
• Effort that is a revenue enhancement

Some 2023 efficiencies and continuous improvement efforts include:

• Interpretation services - Implementation of Voyce Language Services: enhanced support for all residents to engage in services offered by the City of Waterloo.
• Dog licensing service improvements - transfer of dog licensing to third party service provider. Use of a third party service provider reduces the level of staff resources required to support this service delivery to residents as well as enhance services through improved web processing, which will also increase licensing compliance and revenue generation.
• Purchase of zero emissions vehicles - the acquisition of zero-emissions vehicles that are in line with our operational needs, aiming to reduce fuel and repair expenses while decreasing the City's total greenhouse gas emissions. In 2023, six internal combustion engine vehicles were replaced with new zero-emissions vehicles.
• Streamlined development approvals - in 2023 the City completed various initiatives to modernize our development approvals process and improve operational efficiencies, funded by the provincial Streamline Development Approval Fund (SDAF). The SDAF is an important tool to support municipal partners so that housing can be brought to market faster. It recognizes that the province and municipalities need to work together to increase the supply of housing and make housing more affordable for Ontarians. Under the fund, the City of Waterloo received $1,000,000. The City advanced twelve different initiatives under the SDAF to streamline development applications, and made significant strides to address application backlogs and modernize planning processes through investments in technology.

Per City of Waterloo policy, we use a 12-month average of the Core Consumer Price Index to guide our base budget and operating impacts of capital and growth. This was trending at 4.28% on a 12-month average as of September 2023 data. While inflation has improved compared to this time last year, the City of Waterloo continues to faces challenges related to price escalation, and recognizes the impacts on the community as well. Our beginning base budget and operating impacts of capital and growth amounts to support existing services in 2024, 2025 and 2026 is 3.82%, 3.86% and 3.55%, which is less than the trending inflation rate of 4.28%.

This base amount below the rate of inflation, includes $1.6M in efficiencies, equivalent to 1.75% in property tax savings.

To support new services, we add additional funds to this base amount for council consideration, following the community priorities of our strategic plan. These include expanding the fire department (a matter of community safety, with potential impacts to residential fire insurance rates), improving winter sidewalk conditions (a key community ask during the 2023 budget process), and adding more planning resources to help address local housing concerns (needed to advance our affordable housing strategy, and to meet our provincial housing goals). Council endorsed these services when staff presented reports on them in 2023, but they can still decide to make adjustments. The increases for new services are 2.64%, 2.44% and 1.89% for 2024, 2025 and 2026.

Council have access to a list of menu items for potential additions or reduction to these new service levels. The menu items include a total of $2.4M in reduction opportunities (equal to a 2.5% property tax reduction) that Council will consider and may choose to use as part of their deliberation process, which could change this amount.

The 1% final addition for infrastructure costs, including needed updates at our facilities to reduce greenhouse gas (GHG) emissions in this climate emergency, is also something Council can consider and may choose to adjust as part of their deliberation process.

The city uses inflation to help guide how we manage taxes. For the things we are committed to paying in order to continue our current services (like fuel, insurance, equipment and staff), the budget won't go up more than the inflation rate. The proposed budget increase to cover these areas (our base budget and operating impacts of capital and growth) for 2024, 2025 and 2026 is 3.82%, 3.86% and 3.55%, all less than the current inflation rate of 4.28%.

We have also just completed a new Strategic Plan, and as part of that process members of the community, staff and Council identified areas where they would like to see us expand our services. These include expanding the fire department, improving winter sidewalk conditions, and adding more planning resources to help address local housing concerns. These increases for 2024, 2025 and 2026 are 2.64%, 2.44% and 1.89%. While these would be service level increases, they reflect some complex issues that we do need to prioritize (if we don’t ensure our fire department is right-sized for the growth of the city, community safety and resident fire insurance costs are impacted, for example).

There is also a 1% annual increase in funding for infrastructure, to make sure that the roads, pipes, facilities, vehicles and equipment we already have are maintained in good working order and/or replaced as needed. This includes funding to help reduce greenhouse gas emissions at our facilities, a necessary step in addressing our climate emergency.

While the overall budget number is an increase, the budget also includes $1.6 million in efficiencies, which is a 1.75% property tax savings. Staff are continuously looking for ways to improve our services and find savings. Renovating or expanding our existing facilities (libraries, recreation centres, fire halls) on city property instead of building new/buying new property to meet increased demand as our city grows, is one example.

If you're interested in learning more or sharing your thoughts, there will be a Budget public meeting on January 9th. You can attend either in person or virtually. Register for the meeting through the online registration form or complete the Budget feedback survey. Your input is valuable!

City staff have worked hard to find efficiencies and improvements to allow us to continue providing excellent everyday services, while advancing additional projects using existing base budgets and resources. We’ve also carefully considered all the strategic priorities when it comes to new capital projects, focusing on those that will have the greatest impact for our community.

To emphasize the ties between the City of Waterloo's 2024-2026 budget and the strategic plan, we’ve included six strategic stories, to highlight the connection between the tabled budget and the priorities of Reconciliation, Equity, Accessibility, Diversity and Inclusion, Environmental Sustainability and Climate Action, Complete Community, Infrastructure and Transportation Systems and Innovation and Future- Ready. These priorities all intersect, and with a wide focus that encompasses all of them we will get to our strong, sustainable future together. The following projects will advance if the staff tabled budget is adopted:

• More sidewalk clearing to improve winter mobility for everyone
• Transforming our facilities for net-zero
• Planning for affordable housing
• Fire prevention, education and response for community safety
• Investing in active transportation infrastructure
• Transitioning from web content to digital service

These key initiatives and more can be found in the 2024-2026 Business Plans.

This Strategic Story is just one example of how the City of Waterloo's 2023-2026 Strategic Plan and community feedback helped inform the 2024-2026 staff tabled budget.

Reconciliation, Equity, Accessibility, Diversity and Inclusion:

Winter sidewalk clearing is an equity and accessibility issue, not just a transportation concern.

What we heard

When residents shared their vision for the future of Waterloo, common themes included:

When sidewalks are not accessible, this disproportionately impacts low income households, people with disabilities,
older adults and anyone using an assistive mobility device.

Sidewalks should be cleared by the City.

Individuals should clear their own sidewalk and help others that need assistance.

Why it's important

Many residents across the City walk and roll year-round on sidewalks and trails, using them as their primary method of travel, to access public transit, for short trips and for exercise. In the winter, snow covered sidewalks and multi-use paths are more difficult to use. Some members of our community face significant accessibility challenges when snow accumulation occurs. The shared model where both the City and private property owners clear snow from sidewalks will still be in place, with adjustments to improve winter sidewalk accessibility over the next few seasons.

What we're doing

With budget adoption, you would see this work delivered in stages over the 2024-25 to 2026-27 winter seasons. As we implement new solutions, we will evaluate the effectiveness of those approaches. We’ll prioritize the clearing of City-maintained trails near schools, and phase in crews/ equipment to tackle the snow that accumulates at high use crosswalks. We will also focus on snow left at intersections after snow plows clear the roadway. We’ll use education, enforcement and offer program assistance to improve the conditions of sidewalks property owners are responsible for, and pilot clearing snow from some sidewalks where there are no boulevards for snow storage. We will ask for feedback to see how these shared, phased-in options are working, and evaluate how well these and other supports we are providing help everyone get where they need to go. What we learn in the next few years will help determine the future of services and potential funding needed to expand improvements into 2027 and beyond.

Read more Strategic Stories.

This Strategic Story is just one example of how the City of Waterloo's 2023-2026 Strategic Plan and community feedback helped inform the 2024-2026 staff tabled budget.

Environmental Sustainability and Climate Action:

We need to make transformational changes to City operations and facilities to meet our climate change mitigation and adaptation goals.

What we heard

When residents shared their vision for the future of Waterloo, common themes included:

We must work towards achieving low to zero carbon emissions from City offices and service facilities.

We must continue our efforts to reduce greenhouse gas emissions. We should learn how and routinely count the embodied carbon in existing buildings, and realize how important it is to carefully manage demolition waste, and to champion repurposing of existing buildings and building materials where possible.

Prioritize more initiatives to support lowered carbon emissions.

Why it's important

City facilities support all our programs and services, but these buildings are also the largest source of greenhouse gas (GHG) emissions for our organization. The City of Waterloo has declared a Climate Emergency, and we are taking action on climate change. We have pledged to achieve a target of 50 per cent reduction in GHG emissions (relative to 2010 emissions) by 2030, on our way to net-zero emissions by 2050. The City needs to do our part and set an example as a leader in environmental sustainability practices and climate action, and we only have about 85 months left to meet our 2030 goal.

What we're doing

With budget adoption, we’ll continue our efforts to improve and transform the sustainability of our city buildings and facilities, with a heavy focus on our recreation centres (Albert McCormick Community Centre, RIM Park Manulife Sportsplex and Healthy Living Centre, and Moses Springer Community Centre) in 2024-2026. We’ll move forward with deep energy retrofits, as well as low-carbon electrification of building mechanical systems. Low-carbon retrofitting of our existing facilities will be done as part of necessary upgrades, helping us meet our greenhouse gas mitigation goals while making sure that our facilities will meet the needs of future generations. We’ll also continue to seek grant funding opportunities to help, like our application to the Green and Inclusive Community Buildings Grant - Second Intake in February 2023. Transformational change involves larger system/building level retrofits, to support infrastructure renewal and corporate GHG emission reduction targets. This work will align with needed renovations and building improvements, in order to enhance the programming opportunities at these facilities.

Read more Strategic Stories.

This Strategic Story is just one example of how the City of Waterloo 2023-2026 Strategic Plan and community feedback helped inform the 2024-2026 staff tabled budget.

Complete Community:

Affordable housing is viewed as the top challenge that we need to address.

What we heard

When residents shared their vision for the future of Waterloo, common themes included:

The biggest initiative should be promotion of policies for affordable housing implementation.

Build housing that is affordable to the poor, the working class and the lower middle class. More housing is not the same as affordable housing.

Offer economic incentives to developers to deliver on affordable housing.

Why it's important

When we asked the community about their vision for the future of Waterloo and the barriers we need to address, affordable housing was viewed as the top challenge. The housing crisis requires all levels of government to work together on solutions. We need to do our part, and implement our Affordable Housing Strategy to promote the supply and mix of affordable housing. This includes collaboration with area municipalities and community partners on housing initiatives that are critical for our future.

What we're doing

With budget adoption, we’ll have more resources available to implement our affordable housing objectives. We’ll advance the City’s Affordable Housing Strategy, planning for and promoting a greater supply and mix of housing, aiming to prioritize non-market (subsidized) and temporary housing, and optimize the use of existing housing to protect the affordable housing supply. We’ll look to provide incentives to build affordable housing, and expand City and community capacity, awareness and supports for affordable housing. We’ll support the Region’s housing initiatives, respond to provincial legislation and policies, and monitor and research trends to identify other incentives for affordable and attainable housing. We will encourage the development industry to seek opportunities to construct thoughtfully designed, affordable, and accessible units. We’ll continue to seek grant funding opportunities to help, like our application to the Housing Accelerator Fund in August 2023.

Read more Strategic Stories.