County draft budget projects 2024 tax levy increase at 4.8%

Broadband project eliminated to bring down levy; museum pavillion project questioned

GUELPH – Wellington County’s tax levy for 2024 would increase by 4.8 per cent under the latest budget proposal before county council.

The levy increase is down from the 5.3% hike projected in an earlier version of the budget, thanks largely to the proposed closure of a $1.6 million rural broadband capital project.

At its Nov. 21 meeting, the county’s economic development committee agreed to take the project out of its draft budget, with $600,000 to be used to reduce the tax levy in 2024 and the remaining $1 million to be transferred to a contingency and stabilization reserve for possible use towards the Ride Well program if it continues beyond the current March 31, 2025 end date.

Councillor Jeff Duncan, chair of the economic development committee, noted the broadband funds were designated for some work that is “not going to be required.”

The draft 2024 budget projects total expenditures of $293.3 million and a levy (amount supported by local taxation, as opposed to grants, user fees or other revenue) of $129 million, up 4.8% from 2023.

That would mean a tax increase of $31 per $100,000 of residential assessment.

The county’s 10 year plan shows a projected levy increase of 4.7% in 2025, before dropping progressively to between 3.6% and 3.3% from 2026 to 2028 and to under 3% between 2029 and 2033, when the projected levy increase is estimated at 2.5%.

“The inflation factor for 2024 represents the current non-residential building construction price index,” states a report from county treasurer Ken DeHart.

“It is anticipated that inflation will return to historical levels and the future forecast reflects this expectation.”

The projected levies through the first half of the upcoming 10-year budget cycle are higher than projected in last year’s 10-year plan.

The report notes inflation and economic conditions, combined with provincial policy changes on development charges, as major factors in the need for more local tax dollars.

“After many years of low tax rate increases and a stable economy with low inflation (county tax rates increased by an average of 2.4% annually for 14 years between 2009 and 2022), the post-pandemic recovery has brought upon many new economic challenges,” the report states.

“Geo-political tensions, global supply chain disruptions, an aging population, record levels of immigration, a shortage of skilled labour and an inability for new housing builds to keep up with demand have all had negative effects on the global, domestic and local economies.

“The result of all these factors is a rampant increase in inflation – including labour, construction costs, service contracts and insurance rates.”

The report continues, “At the same time, demands on public services are increasing and the county’s population is growing.  There has been a significant drop in housing affordability, an increase in homelessness, and more demands on health care that comes with a growing and aging population – such as paramedic services and long-term care.

“At the same time, in order to combat inflation and housing affordability concerns, the Bank of Canada has been increasing interest rates and the provincial government has been providing additional exemptions on municipal development charges.

“The change in interest rates will increase the county’s cost to borrow, while the drop in the county’s ability to collect development charges – during a period of high growth and increasing capital costs – means that costs will shift from new development onto existing property taxpayers.”

County staff are estimating a drop in anticipated development charge revenue of anywhere between $11.8 million and $19.7 million over the next decade.

“This impacts the county’s ability to pay for growth and, as a result, has delayed the construction of some of the new garages that were included in last year’s capital forecast and shifted some costs away from growth and onto the county tax levy,” the report notes.

The report points out the draft budget includes use of reserve funds to keep the levy increase from going even higher.

“Without the strategic use of the county’s reserves and dedicating resources to correcting the gravel assessments, the (2024) county levy would have been at least 2% higher (6.8%).”

The draft 10-year capital forecast projects a total capital investment of $562.9 million over the next 10 years, including $262.8 million for roads, bridges and culverts, and $109.9 million in roads facilities and equipment, representing 66.2% of total capital spending.

Other key initiatives include:

  • continued construction of a library branch in Erin;
  • development of the county’s only active landfill site at Riverstown;
  • construction of new garages in Arthur, Erin, Brucedale and Harriston;
  • construction of new ambulance facilities throughout the county; and
  • construction of three new affordable housing buildings and an ongoing investment in county-owned existing social and affordable housing units.

The 2024 capital budget is funded through a mix of sources including:

  • 4% from reserves;
  • 2% from federal and provincial funding;
  • 9% municipal recoveries (predominantly for social housing and roads related projects);
  • 9% development charges and growth-related debentures; and
  • 6% debentures.

“In an effort to minimize the effect on the tax levy,” the report states the 10-year forecast relies on $81.8 million in debt funding for the upgrading or replacing six ambulance stations and six roads garages, as well as work at the Elora waste facility, the Erin library and several roads projects.

County councillors will meet in early January for a special budget session, after which possible budget revisions will be considered at committee meetings that month, before the budget and 10-year plan are presented for passage at the Jan. 25 county council meeting.

One project likely to be discussed is a $1.3 million pavilion proposed for the County of Wellington Museum grounds in Aboyne. The project escaped a preemptive axing at the Nov. 30 meeting after councillor Steve O’Neill questioned the need for it.

O’Neil noted the pavilion was originally estimated to cost $750,000, but the latest projections show an added $600,000 for the project.

“That’s an excessive amount for a project that we do not have to do. We are in a spot where our budget is going up about $1.3 million for a service that is not essential … it’s not necessary,” O’Neill stated.

“I will agree with councillor O’Neill that this project has morphed and almost doubled in price and it’s that ‘need versus want,’” said councillor Earl Campbell.

“I think the need for pavilion stands on its own, but I think the design of (the pavilion) and the expense of that could be reconsidered, possibly almost so far as to suggest that another architect be used to come up with a secondary plan, then you’ve got something to compare it to.”

Wellington Place director Jana Burns explained the additional cost for the pavilion stems from increased costs for labour and construction materials and efforts have been made to reduce expenses, including limiting paving around the facility in favour of more grass area.

“The pavilion is a three-seasons structure. It’s enclosed on three sides. It serves as a public space for gatherings, for Indigenous events,” she said.

“It was discussed in mind with the creation of the Indigenous Gathering Circle.”

Burns noted the facility would also be rented out for celebrations and used for events such as the county’s multicultural festival or other programming at the museum.

“When it comes what this building actually is and whether it’s a nice-to-have, or whether it’s a need, you can make that argument for almost anything short of maybe a road or a bridge,” said councillor Doug Breen.

“So the question for me is really will it be used, because we could build something that costs half as much, but if no one uses it then that’s a bigger waste of money than spending on something that will actually be used.”

Breen continued, “I actually think that what’s proposed there will be used and will be used heavily by the public … I mean, you could say that New York Central Park was a waste of money too, right?”

Information, heritage and seniors committee chair Mary Lloyd noted the intent of the facility is to provide a sheltered area for outdoor activities.

She pointed out the county’s day care and retirement living facilities, also located at the Aboyne campus, would be among the users of the pavilion.

“Having activities under a shelter where children and seniors can be protected from the elements, as far as I’m concerned, is far more reasonable than expecting them to sit out in a very fully-exposed area,” said Lloyd.

At O’Neill’s request, the museum and archives 10-year capital forecast and operating budget was voted on separately from the rest of the committee’s November meeting minutes.

A motion to endorse the forecast, including the pavilion structure, for continued budget deliberations was approved in a recorded vote, with only O’Neill objecting.

Lennox told council he is expecting robust discussion on broad terms and specific items as the budget process moves forward.

“These decisions need to be ours,” he stated.

“We have a number of issues you raised … I think we’re going to have to vote on those things and decide that we, as collective, these are the direction we’re going to support, or not …

“Maybe that’s different than the process we’ve had in the past, but I absolutely think that we’ve got to get this stuff out on the table to vote on so that everybody feels that they have a chance to have input into this process.”