2024-2027 Multi-Year Budget: operating budget

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• Budget summary
• Economic overview
• Operating budget
• Capital budget
• Long-term financial strategies
• Long-term financing tools

Learn about the foundations of the operating budget in the budget manual.

Operating budget

The City is experiencing increasing costs related to fuel, chemicals, utilities, medical equipment and parts and materials. This noteworthy trend is shared through quarterly variance reporting. These inflationary pressures were identified in the 2023 budget confirmation and continue to compress resources required to deliver City services.

To respond to these increasing pressures, the City reviewed the historical variance trend analysis to help identify efficiencies and revenue opportunities. Staff identified several trends and made adjustments in the multi-year budget to align the budget with actual activity and to help relieve inflationary pressures.

Historically, short-term interest income revenue was budgeted at a rate of less than one per cent. In the past, this served as an appropriate target. However, to combat rising inflation the Bank of Canada has delivered nine consecutive rate increases since March 2022. In 2022 interest income revenues at the City resulted in an annual surplus of $1.1 million and in 2023 the City is projecting at a $1.9 million surplus. To respond to this trend while also managing future risk of uncertainty, staff adjusted interest income revenue to reflect a rate of 2.5 per cent resulting in budgeted revenues of $1.5 million, an increase of $1.0 million and a reduction of the tax base by 0.35 per cent in 2024. Short-term interest rates are not expected to stay at this level indefinitely and beginning in 2025 the interest rate projection was decreased by 0.25 per cent in each following year.

One budget strategy the City uses to budget for vacancies is gapping. The compensation budget is reduced to account for vacancies and the average time needed to fill a vacant position. Staff reviewed the historical vacancy trend and the amount budgeted for gapping was increased by $438,000, or a tax base reduction of 0.15 per cent. The gapping budget is now $2.7 million or one per cent of total compensation. Gapping was further used in this multi-year budget as a temporary phase-in strategy to align the need for accelerated housing-related resources with timing of hiring. Additionally, through Council budget amendments new staffing positions include a half year phase-in reducing the tax requirement by 0.82 per cent for the City and 0.9 per cent for local boards in 2024. The phase in strategy for the City continues throughout the four–year Multi-Year Budget.

Assessment growth revenue is normally budgeted at one per cent of the base budget. In recent years, actual assessment growth revenue has exceeded this budget target. To better align the budget to this reality, the City has increased assessment growth revenue assumptions to a conservative 1.15 per cent per year. Assessment growth revenue is allocated proportionately with 67 per cent allocated to the City and 33 per cent allocated to local boards and shared services. Actual assessment growth revenue for 2024 was confirmed at 1.23%.

The Municipal Property Assessment Corporation (MPAC) has a four-year assessment cycle, however, the 2020 Assessment Update was postponed by the Ontario government due to the COVID-19 pandemic. This means that current property values are based on the 2016 assessment cycle. This has resulted in fewer appeals and requests for reconsideration, meaning the City was in a surplus position of $1.1 million in 2022 and is forecasting a surplus of $1.0 million in 2023 related to appeals costs. This is expected to continue until the next assessment cycle, and therefore budgeted assessment appeals and write-offs have been decreased by $400,000 in 2024 and increased in 2026 based on staff’s best estimate of the timing of the next provincial assessment update. Without an announcement to date, staff feel it is unlikely to occur in 2024 for the 2025 taxation year.

Municipalities are required to deliver a balanced budget. The budget is the tool which determines how much money (or revenue) is needed to provide services to the community. The operating budget is funded by different revenue streams. Table 7 and Table 8 highlight the gross operating costs, and the operating funding sources, respectively, to bring the City’s budget to a balanced state.

In 2023 Council approved the Revenue Budgeting Policy. The policy guides that as costs increase, user fees should also increase proportionately to maintain the appropriate user/property tax ratios. The 2024-2027 rates, fees and charges guide can be found on the budget website. Most fees are increasing relative to inflation, which is between two and six per cent in 2024-2027. Some fees have increased at rates greater than inflation including:

• Solid waste user fees which are increasing at the same pace as contractual increases for disposal costs.
• Death registration, marriage ceremony and marriage witness fees in City Clerk’s Office have increased 14.30, 20, and 25 per cent respectively to reflect actual cost of service delivery.
• Finance has several taxation and revenue fees increasing between 20 and 100 per cent to reflect actual increasing costs and overall market comparison.

New fees introduced in 2024 include:

• construction, renovation and demolition costs in solid waste to provide a new program for separation,
• Parks fees to resolve inconsistencies in the field inventory and to meet user expectations,
• new types of signs approved through the sign by-law,
• Fire response fees related to elevator entrapment calls,
• monthly concession space rental and leisure pool rental to provide more community opportunity, and
• accounts receivable interest past due and accounts receivable collection transfer to tax letter.

All fare changes resulting from the Transit Fare Strategy are incorporated into the 2024-2027 fees, rates and charges guide. The GO Transit co-fare is now free when connecting with the GO Train. The Transit fare has been removed to reflect the updated Metrolinx program.

Pending a provision of service Council decision in February 2024 related to the collection of recyclables at the Public drop-off location, a new fee may be implemented for January 1, 2025.

Tax-supported budget

Property taxes fund just over half of the City’s budget. While it’s important to consider all revenue sources, generally speaking, property taxes represent the cost of providing goods and services that benefit citizens as a whole.

The tax-supported increases required, net of assessment growth, to fund the budget over four years are included in Table 9, by category.

As outlined in Table 9 above, there are three large categories that influence the total tax levy increase: city services, local board and shared services (LBSS) and most recently, provincial impacts related to housing, homelessness and hospitals.

City services

The City services portion of the tax levy includes investment to maintain core service delivery in a growing community while striving to advance the Future Guelph strategic plan. Table 10 breaks down the annual investment to City services by investment category, as well as the tax levy impact for each year.

City services are brought to life by the people who plan for and execute these services daily. This is reflected in the fact that compensation and benefits account for just under 50 per cent of the total expense budget. From a base budget perspective, inflation factors for economic increases based on provincial legislation and collective agreements range from 1.75 to 6.77 per cent, with the average increase being closer to 3 per cent.

Changes to statutory remittances also impact the cost of service delivery. In 2024 CPP is moving to a two-tiered deduction increasing City costs by approximately $400,000. Various contractual agreements in place with benefit providers which have increased in cost between three to 13 per cent over the four-year budget period. It’s important to note that while inflation continues to impact the City’s operating base budget, a conservative approach to building the budget is resulting in base budget inflationary increases that are below current rates of inflation. Additionally, it’s worth noting that inflationary adjustments were not factored into the 2023 budget as it was managed through variance during this confirmation year.

The multi-year budget includes the operating impacts carried forward from Council’s approval of capital projects in the 2023 or prior years’ budget, as well as additional operating impacts from the 2024 to 2027 capital budget. Within this category are the operating impacts being phased-in for the South End Community Centre and the Baker District Redevelopment which are both expected to open in 2026. Any amendments to the operating impacts from capital must be reviewed in alignment with the capital project that they are supporting.

Growth investments in the multi-year budget reflect the operating budget investments required to maintain our current service levels to our growing community. This includes investments to meet paramedic service targets, building capacity to support staffing of City services and improving service-equity within our diverse and growing community.

Service enhancements represent the investments built into the budget that increase our service levels to our current and future Guelph community. These include investments to support emerging trends in transit technology, advancement of the parks and recreation master plan, keeping up with the pace of technology to deliver hybrid and virtual meetings, improving bylaw and enforcement response and investments to acknowledge our City’s upcoming bicentennial. It’s important to note that in 2025, Guelph’s transition from the Blue Box program to a new producer-led responsibility model creates fiscal capacity for other service program pressures.

The capital budget is funded through annual transfers from the operating budget to capital reserves. Increases to capital funding have been built into the budget over the four-year period, with a two per cent tax levy impact in 2024. This includes inflation, the historical backlog infrastructure renewal increase and prior approvals of capital increases for Race to Zero and the Baker District Library. Deferrals of capital projects have been made to balance the capital budget to align with funding levels available. It’s important to note that if Council chooses to lower the capital funding, there will need to be further capital plan project deferrals and cuts to balance the budget. Further details are available in the capital budget and financial strategy sections of this website.

A complete representation of the operating budget, by department, as well as the details of operating budget requests are available for review in the 2024-2027 Multi-Year Budget dashboard.

Local boards and shared services

The City funds all or part of the operations of several local boards and shared services (LBSS) that have separate governance structures and varied types of relationships with the City. More information about the City’s LBSS is available in the budget manual.

Council does not have direct oversight of these boards and agencies; however, City Councillors do sit as members of the board of governors for each of these entities and the City is responsible for funding their operations, in whole or in part. Highlights from each of the LBSS organizations are provided below.

Guelph Police Services (GPS):

• Continued phased implementation of the KPMG Staffing and Service Delivery study recommendations.
• Continued implementation of the supportive staffing program initiated by the Police Services Board in 2023.
• Financial risk due to grant agreements not aligning with the budget cycle.
• Capital funding providing for lifecycle replacement of existing assets, dispatch communications equipment and expansion and renovation of the City’s backup 911 dispatch facility.
• Detailed Information presented to the Guelph Police Services Board:
  • GPS Board meeting video, October 5, 2023.
  • GPS Ten Year Capital Budget and Forecast 2024 to 2033, July 20, 2023.
  • GPS 2024 to 2033 Capital Budget and Forecast and 2023 Budget Additions, October 5, 2023.
  • GPS 2023 Capital Budget Presentation for Board, July 20, 2023.
  • GPS 2024 to 2027 Operating Budget Presentation for Board, October 5, 2023.
  • GPS 2024 to 2027 Operating Budget, October 5, 2023.

Guelph Public Library:

• The Guelph Public Library is offering significantly more programs and the complexity of community members’ needs are steadily increasing.
• Multi-year budget includes a phased-in approach for hiring additional staff to operate the new Central Library beginning with five additional positions in 2024 and continues through the forecast as a phased-in approach for hiring that prioritizes key roles at each stage of the plan. Council reduced the 2024 budget to reflect a half year phase in strategy.
• Further details can be found in the Guelph Public Library September Board Minutes.

The Elliott Community:

• Capacity expansion of 29 residents part way through 2024 resulting in higher expenses in 2024. Ministry of Long-term care funding begins after residents move-in.
• Legislative change impacting direct service hours resulting in higher operating costs.
• Inflationary impacts on both staff resourcing and operating costs.
• Further details can be found in the Board of Trustee approved operating budget.

Wellington-Dufferin-Guelph Public Health:

• No significant changes to budget; inflationary and growth increases only.
• Risk of ongoing inflationary operating costs; minimal changes to provincial funding over the long-term; and unplanned impacts from the Province’s Public Health Transformation/Amalgamation efforts.
• Further details can be found in Wellington-Dufferin-Guelph Public Health’s 2024 Draft Budget.

County of Wellington:

• Budget developed to align with the County forecast approved in 2023 and this increase is phased-in over four years due its significance.
• County budget process lags City timing, estimates may change.
• In addition to the budget impact shown in Table 11, the budget includes $3.6 million and $1.15 million in 2024 and 2025 respectively as part of the Provincial housing, homelessness and hospital section of the operating budget below. Table 11 highlights the investments in the LBSS budget for 2024-2027, as well as their respective contribution to the total tax levy requirement, net of their proportionate assessment growth.
• Further details can be found in the County Preliminary 2024-2033 Ten Year Plan; Social Services.

Downtown Guelph Business Association (DGBA):

The DGBA budget is included for Council approval. This is a special levy that is applied to downtown commercial properties in addition to the City’s general taxation requirement. The 2024 DGBA budget has been approved by the DGBA Board with a gross expense budget of $697,955 and a total levy of $700,194. DGBA also submitted forecast budgets for 2025-2027. Table 12 summarizes the previous year Council confirmed budget for DGBA as well as the 2024-2027 budget and forecast.

Provincial housing, homelessness and hospital impacts

The City developed the Provincial housing, homelessness and hospital portion of the tax levy increase to draw attention to the impacts of recent legislation like Bill 109 and Bill 23, Guelph’s housing pledge and hospital services that are not normally funded through municipal contributions.

The City of Guelph is mandated to grow by 18,000 homes by 2031. This means more than just building homes. In response to legislated requirements associated with Bill 23 and the City’s housing pledge, the City must invest in growth enabling resources to support our commitment to growth. Additionally, before any new development begins, the City must build the water, wastewater, stormwater, roads and infrastructure to support it. Bill 23 introduced changes to development charge exemptions, discounts and phase-ins leaving the City with an estimated $227 million in lost revenues required to build growth-supporting infrastructure over ten years. A strategy has been built into the budget to phase-in these impacts to try to use future assessment growth, where possible, to offset these lost revenues. Table 13 summarizes the investments required by the City to respond to the housing legislation.

The County of Wellington is the Consolidated Municipal Service Manager for Social Services in Guelph. They are responsible for delivering Social Housing, Income Assistance and Children’s Early Years services to City and County residents. The County sets the budget and the City funds its share which sits at nearly 90 per cent of the total cost. ​In September, the County presented preliminary budget requirements to implement an updated Housing and Homelessness Plan. In 2024 and 2025, the County is projecting a significant increase in its operating costs to address homelessness prevention, investment in emergency shelters, transitional and supportive housing units, enhanced funding in the rent supplement program and increased maintenance costs to support the current housing stock. ​The City’s portion of this increased investment is presented in Table 14.

In 2019, the City engaged in discussion with the Guelph General Hospital (GGH) to determine upcoming capital expansion requirements of the hospital that address immediate and urgent capital needs. Through the staff report, three capital projects were identified, totaling $45 million, with a request from the hospital to support a 10 per cent investment of the total project over five years. As part of the 2020 City budget, Council approved the hospital’s request to support a $4.5 million dollar investment over a six-year term to be added to the City’s base budget and presented as a separate hospital levy on the tax bill. For years one through three of the commitment, Council approved the investment to be funded from the Tax Rate Operating Contingency reserve.

In 2024, a budget request to allocate this funding to the base budget is reflected within the Provincial housing, homelessness and hospital portion of the tax rate levy, Table 15. The continued use of reserves to fund this commitment is not recommended as tax contingency reserves have been exhausted through the planning process. More information about the status of City reserves is detailed in the Reserve section of the website. The six-year commitment will come to an end in 2026, and therefore the reversal of the base adjustment will occur as part of the 2027 budget.

On November 29, Council amended the budget to fund the 2024 transfer of Guelph General Hospital levy from the Tax Rate Operating Contingency Reserve.

Non-tax-supported budget

The City’s non-tax supported budget is comprised of stormwater services, water services, wastewater services, parking services, Ontario Building Code Administration (OBCA) and court services. The budgets with significant highlights follow.

Water, wastewater, and stormwater rates

The City’s second largest revenue source after property taxes are the collective water, wastewater and stormwater rate revenues. These revenues are charged based on a user fee model; the water and wastewater rate include both a fixed and variable component based on use, while the stormwater rate is charged based on a property’s impervious area. These rate services are critical housing-enabling services that have significant capital asset inventories that are both aging and in need of upsizing to meet the increased population and job targets.

Similar to the property tax presentation, there are three large categories that influence the total rate increase: City services, local boards and shared services (LBSS) and provincial impacts related to housing (homelessness and hospital impacts are not funded by the rates), Table 16.

City services

The City services portion of the rate includes investment to maintain core service delivery in a growing community while striving to advance the Future Guelph strategic plan. Table 17 breaks down the City’s controllable annual investment to rate services by investment category as well as the rate impact for each year.

From a base budget perspective, the same compensation-related pressures described in the tax budget section apply, with economic increases based on provincial legislation and collective agreements averaging at an increase of three per cent. Changes to statutory remittances and benefit costs also impact the cost of these services ranging from three to 13 per cent over the four-year budget period.

It’s important to note that while inflation continues to impact the rates in areas like cost of chemicals and other specialized parts for maintenance, a full review of the historical actual experience compared to the budget was performed and base budget reductions were made in 2024 that more than fully offset the inflationary increases.

The rate budgets include modest investments in the operating budget across the span of capital impacts, growth and service enhancements. These investments include resourcing to manage and oversee water-taking and treatment facilities and the wastewater sewer investigation program; technical services manager to enable a realignment of existing resources; resources to provide direct supervision of treatment equipment preventative maintenance; resourcing to ensure water is available to support the City and implementation of the Water Master Plan; resourcing to modernize and improve overall Supervisory Control and Data Acquisition (SCADA) system in accordance with audit results; resources to implement the utility billing and collection team upon the transition of the function from Alectra Utilities Corporation.

The capital asset portfolio is the most significant driver of the water, wastewater and stormwater services rate increase, representing core assets totaling $2.3 billion in the Asset Management Plan (2020 replacement value). The annual transfers from the operating budget to the capital reserve funds pay for the replacement of the aging pipe networks and facilities as well as funding all the growth-related capital costs not funded by development charges. The capital funding required to balance asset renewal and growth needs is the largest driver of cost increases in the rate budgets over the four years.

It should be cautioned that even at the current proposed capital contribution for the rate businesses, the water services capital reserve fund remains in a growing deficit through the entire 10-year budget and forecast period. Staff will be focused on reviewing this in more detail and reporting back to Council with more information and a solution for moving forward in future budget confirmation years.

Local boards and shared services

The rate supported budgets are also impacted by the Grand River Conservation Authority (GRCA) which is one of the LBSS organizations that the City is legislated to fund. Council does not have direct oversight of this agency. Highlights from the GRCA budget are identified below.

Grand River Conservation Authority (GRCA)

• No significant changes to budget; inflationary and growth increases only.
• Legislative changes to the Conservation Authority Act have not been reflected in this budget, given the timing of a Memo of Understanding between GRCA and the City that is still in development

The impact of the GRCA is outlined in Table 18 below.

Provincial housing impacts

The rate budgets are significantly impacted by the development charge loss revenue impacts from Bill 23. As previously mentioned, water, wastewater and stormwater infrastructure are the services that the City needs to enable more housing and meet the housing pledge and as a result, there are staffing impacts to accelerating development application reviews and responding to the anticipated higher volumes of inspections and servicing requirements. Table 19 summarizes the rate investments required by the City to respond to the housing legislation.

The above noted investments to increase capital funding over time to offset the impacts of Bill 23 exemptions, discounts, and rate phase-ins are significantly lower than the projected costs associated with Bill 23 for the rate supported services, as outlined in Table 20.

This table shows that over the multi-year budget period, water, wastewater, and stormwater rates supported capital funding that would otherwise be available to support the capital programs of work for these services are instead being redirected to funding development charge exemptions, discounts, and phase-in costs. This is even after the significant increases proposed to capital funding for these services to offset this impact as outlined in Table 20 above. The above-noted projected exemptions, discounts, and phase-in costs will be monitored closely in comparison with actuals and will be reported quarterly through the Budget Monitoring Reports.

The water, wastewater, and stormwater user rates are impacted by a multitude of pressures as noted above. The average three-person household consumes 188 square meters in a year and has an average impervious area of 180 cubic meters. From a residential bill perspective, the monthly increase to the average household over the four-year period is estimated in Table 21.

For a four-year average monthly increase of $8.60 over the three rate services is what is needed to ensure infrastructure is being maintained in a state of good repair, service is being delivered to a growing population, all requirements of the Safe Drinking Water Act are being met, and our city is in a better position to accommodate the more severe and frequent storms.

Ontario Building Code Administration (OBCA)

The City’s Building Services division authorizes all building construction and demolition in Guelph. The administration and enforcement of activities are completely funded by revenues generated from building permit fees. The 2024-2027 multi-year budget is driven mainly by inflation and providing core service delivery to a growing population. To maintain base service delivery, building permit revenues are increasing by 5.3 per cent in 2024, 2.9 per cent in 2025 and 2.8 per cent in 2026 and 2027. Permit fee increases range between four and 25 per cent in 2024, zero and 2.9 per cent in 2025, 2.6 and 7.69 per cent in 2026, and zero and 2.8 per cent in 2027. OBCA is also impacted by the provincial housing challenges discussed above which requires resource investment to meet demand. Table 22 highlights the impacts described above.

Parking services

The parking budget is in accordance with the recently approved Downtown Parking Master Plan. Overall, the operation continues to be funded by a mix of parking revenue (77 per cent) and property taxes (23 per cent) in 2024. All monthly permits, administrative charges, and reserved rental fees are increasing by five per cent in each of the four years. There are no forecasted increases to hourly or event rates. The budget introduces the forecasted outcomes of the new parking payment- in-lieu program that is scheduled for Council’s consideration in the first quarter of 2024. New fees have been added to support the residential permit program to respond to customer demand and support overnight parking for residents. The following fees have been added to the fees, rates and charges guide in 2024.

• Farquhar Street permit: $118.08
• Market Parkade residential: $72.26
• Winter overnight parking recreation centre – four-month permit: $153.50
• Reserved space rental full lot day rate per space required: $27.89
• York Road permit: $74.68
• One-to-two-hour permissive monthly permit: $29.85