2026 Budget Update: Operating budget

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

Operating budget

Municipalities are required to deliver a balanced budget. The budget is the tool that determines how much money (or revenue) is needed to provide services to the community. The operating budget is funded by different revenue streams, and funds for capital work are also raised through the operating budget. The City’s operating budget is split into two parts: City services, which is under the direct control of the Mayor and Council, and Local Boards and Shared Services (LBSS), which are governed by independent Boards as defined through their governing legislation.

On this page, you can find information about the City Services operating budget. There is a separate page for LBSS that will be populated in early December before those budgets are presented to Council.

Table 5 and Table 6 highlight the gross operating costs and operating revenue sources that bring the City’s budget to a balanced state.

Table 5 City-services gross operating costs by type ($ millions)

Expense type	2025 Confirmed	2026 Forecast	2026 Update	Annual change 2025 to 2026 Update
Salary, wage and benefits	218.7	232.3	235.7	17.0
Purchased goods	38.6	41.3	39.5	0.9
Purchased services	47.2	49.0	48.1	0.8
Long-term debt charges	12.3	12.3	16.6	4.4
Government transfers	2.4	2.3	2.7	0.3
Other transfers	7.0	6.6	6.7	(0.3)
Financial expenses	3.5	4.0	3.5	0.0
Transfers to reserves	137.7	148.0	146.5	8.8
Total costs	467.4	495.8	499.3	31.9

 Table 6 City-services gross operating revenue by type ($ millions)

Funding source	2025 confirmed	2026 forecast	2026 update	Annual change 2025 to 2026 Update
Taxation	229.8	249.5	244.4	14.6
Supplementary and other taxation	7.4	7.5	7.5	0.1
User fees and utility rates	138.4	151.1	153.5	15.1
Product sales	2.5	2.5	2.6	0.1
Licenses and permits	6.3	6.5	4.2	(2.1)
Interest and penalties	7.9	7.9	7.9	0.0
External recoveries	17.5	18.6	19.2	1.7
Grants	37.0	36.7	37.3	0.3
Reserve fund transfers	20.6	15.6	22.7	2.1
Total operating funding	467.4	495.8	499.3	31.9

Tax-supported operating budget

Property taxes fund approximately half of the City’s budgeted expenditures. Services that are fully or partially funded by property taxes make up the “tax-supported operating budget.”

The draft 2026 Budget Update was prepared in alignment with the Mayoral Budget Direction 2025-B7, with the objective of balancing community affordability with  the investments needed to maintain core service delivery in a growing city and advancing the Future Guelph strategic plan.

The 2026 budget was originally adopted by Council in late 2023 as part of the 2024 – 2027 Multi-Year Budget and included a City Services tax levy increase of 5.90 per cent.

Through the 2025 Budget Confirmation process completed in late 2024, the 2026 forecast was updated to reflect a City Services tax levy increase of 4.51 per cent. This increase includes:

• Base budget/inflationary impacts – the cost of continuing to deliver the services currently provided by the City for our community.
• Growth investments to continue to maintain service levels for our growing community.
• Service enhancement investments that increase service levels for the whole community.
• Operating impacts from capital – some growth and service enhancement investments are related to capital investments made through 2025 and prior capital budgets.
• Service reductions – disinvestments in services, decreased service levels, or increased fees for service that reduce property tax.
• Capital funding – transfers to the City’s capital reserve funds that then fund the capital budget and forecast. These transfer assumptions were updated as part of the 2025 Budget Confirmation process.
• Respectful requests from Council for budget investments that were included as part of the 2025 Budget Confirmation.

Through the 2026 budget update process, City staff have:

• Reviewed and updated base budget/inflationary pressures for changes that occurred since the 2026 forecast was shared with Council in November 2025.
• Reviewed all operating impacts from capital to validate timing of project completion and the need for the operating budget to maintain fiscal accountability.
• Reviewed growth and service enhancement investments included in the 2026 forecast in accordance with the budget prioritization criteria and a lens of affordability.
• Developed options to reduce the tax levy through service reductions and service efficiencies.

Staff assessed proposed investments and divestments using the following prioritization criteria:

• Creation of new housing units
  The services directly required to enable more housing (water, wastewater, stormwater and roads).
• Meeting legislated and regulatory requirements
  Investments to meet legislative requirements including maintaining standards in emergency service response, health and safety, and minimum winter road maintenance standards.
• Risk of disinvestment
  Investments where disinvestment or deferral carries a high or very high level of financial, regulatory or public risk. The risk assessment was aligned with the Enterprise Risk Management framework.
• Public impact
  Where possible, prioritizing investments where disinvestment is deemed to have a significant impact to the residents based on existing service levels and expectations.
• Future Guelph Strategic Plan
  Items that meet the above criteria and additionally demonstrate the ability to advance the goals of the Future Guelph Strategic Plan in a measurable way.

Table 7 breaks down the 2026 investment in City services by investment category, as well as the net change from the forecast to updated 2026 tax levy impact.

Table 7 Breakdown of the City services investment and tax impact for 2026 ($ millions)

City services	2026 Forecast	2026 Update	Change from 2026 Forecast to update	2026 Update tax Levy Impact (%)
Base budget inflationary	7.3	8.0	0.7	2.28
Operating impacts from capital	5.4	4.0	(1.4)	1.13
Growth	(0.5)	(0.7)	(0.2)	(0.20)
Service enhancement	0.0	0.0	0.0	0.00
Service reduction	(0.3)	(3.3)	(3.0)	(0.95)
Council respectful requests	1.7	0.5	(1.3)	0.13
Mayor’s budget enhancements	0.0	0.6	0.6	0.17
Net impact before capital funding	13.7	9.0	(4.7)	2.56
Capital funding	4.8	4.8	0.00	1.38
Net impact before assessment growth	18.5	13.8	(4.7)	3.94
Assessment growth revenue	(2.7)	(2.7)	0	(0.77)
Total City tax impact	15.8	11.1	(4.7)	3.17
Total City tax impact (%)	4.51%	3.17%	(1.33%)	3.17
Guelph General Hospital Levy	0.21%	0.21%	(0.00)	0.21

*may not add due to rounding

The following is an overview of what is included in each category for the draft 2026 Budget Update, and what changed from the 2026 forecast that was prepared through the 2025 budget confirmation process.

Base budget/inflationary

The base inflationary tax levy impact is 2.28 per cent or just over 70 per cent of the City tax levy increase is driven by rising costs to deliver the same level of service. The City operates with a lean budget and a focus on limiting the inflationary impacts as much as possible through continual contract renewal and negotiations, efficiency and innovation.

Investments included in the 2026 Budget Update:

• Updated revenues in Culture and Recreation, Environmental Services, Clerks, and Finance to reflect current sales volumes and service levels.
• Guelph Transit revenue increase based on higher ridership and anticipated growth in the Upass program and Transit Fare Strategy.
• Increased investment in building repairs & maintenance for city-owned assets to address additional pressures due to aging infrastructure.
• Inflationary adjustments for employee compensation and benefits, utility costs, fuel, vehicle repairs and maintenance, operating supplies, and software maintenance to maintain service delivery levels.

Changes from the 2026 forecast:

• Compensation and benefits: Further compensation adjustments of $2.9 million to account for inflationary catch-ups tied to renewed collective bargaining agreements and rising costs associated with supporting the mental health and workplace safety of our frontline emergency service professionals (net impact of $710 thousand after provincial funding and County contribution for paramedics costs).
• Fuel and utility savings of $1.9 million resulting from the federal government’s removal of the consumer federal carbon tax on April 1, 2025.
• Fleet repair and maintenance costs increase of $1.8 million due to market uncertainty, supply chain disruptions, and the impact of current and proposed tariffs.
• Savings on corporate agreements and renegotiated contracts, including $355 thousand in corporate insurance and mobility savings.
• Savings from operational efficiency review and historical trend analysis of $1.9 million.

Operating impacts from capital

Investments included in the 2026 Budget Update:

• $1.1 million staffing investments in the South End Community Center (SECC) to align with a fall 2026 opening date.
• $314 thousand reduction to the phase-out of time-limited capital transfer to the Service Enhancement reserve fund under the Baker District operating cost phase-in strategy, with operating investments related to the Baker District opening included in other categories.
• $1.4 million increase in the IT budget to support long-term ERP program needs, corporate point of sale software, and other investments essential to maintaining the City’s IT infrastructure.
• $882 thousand Transit investment for Route 98 Speedvale Phase 1 enhancements commencing in September 2026, bus shelter maintenance, and activation of digital signs, as well as the phase-in of transit route enhancements implemented in 2025.
• $422 thousand increased investment in solid waste for a growth packer operator and related operating costs for the packer, collection carts, and downtown public space waste container collection.
• $200 thousand additional investment in Fire Services for the NG-911 dispatch phone system for software maintenance.
• $173 thousand investment in operations for fuel, maintenance and resourcing to support the operation of one growth tandem salter/sander and sidewalk plow.
• $40 thousand investment in parks for operating costs to maintain additional km of trails and maintenance for new parks including mowing, trimming, garbage removal, minor repair and regular inspections.

Changes from the 2026 forecast:

• $538 thousand increase to plan request 000848 Funding for South End Community Centre – Additional increase in SECC staffing investments based on updated operational plan to have staff hired and trained when the SECC opens in 2026.
• $230 thousand reduction to plan request 001016 Baker District – Phase-in strategy was updated from the 2026 forecast to align the phase-out of temporary capital funding under the phase-in strategy with the timing of adding resources to support the 2026 opening of the Baker District.
• $192 thousand reduction to plan request 001359 and IT0063 IT Corporate Point of Sale Software – Removal due to a duplication of operating impact related to Point of Sale Software and program realignment.
• $77 thousand reduction to plan request 001360 Data Quality Analyst – Resource was deferred to 2027.
• $50 thousand increase to plan request 001559 JDE – Licensing expansion which is an inflationary increase to annual licensing costs for the City’s financial and HR system of record.
• $174 thousand reduction to TC0095 – Transit IT software investment and upgrade deferred to 2027 pending completion of an updated technology plan for Transit in 2026.
• $148 thousand reduction to IT0119 – IT Cloud Infrastructure operating impact reduction in 2026 as $113 thousand is no longer required and $35 thousand was deferred to 2027 based on timing of capital project completion. $117 thousand reduction to IT0120 – Data Warehouse Infrastructure project cancelled and reported to Council through the 2024 Year-end Capital Budget Monitoring Report.
• $50 thousand reduction to IT0116 – Modernization for Guelph.ca operating impact was removed from forecast due to a smaller scope of work that is being done in-house. The capital budget included in the 2024 budget was paused on the 2024 Year-end Capital Budget Monitoring Report and the budget was deferred outside the 10 year forecast in the 2025 budget update.
• $50 thousand reduction to FS0091 Fire Dispatch Phone system NG-911 – Operating impact was reduced to reflect updated cost estimates.
• $170 thousand reduction to TM0010 – Mobility Van growth operating investment deferred to 2027 to align with new purchase timeline.
• $195 thousand reduction to TC0072 – Digital signs: Due to reduced scope of project, software maintenance costs have been reduced in total and the amount still required has been phased over two years, with 50 per cent being shifted to 2027. The staff resource associated with this project was moved to a budget request in the Service Enhancement category as the scope of work is more broad but does continue to be required to activate the signs.
• $456 thousand reduction to TC0092 – Route Review (ICIP-GUE-01) route efficiencies through merging Conestoga Express Route and Route 98 Speedvale Phase 1 enhancements resulted in operational savings while offering expanded stop coverage, full service and increased frequency.

Growth

Investments included in the 2026 Budget Update:

• $524 thousand in funding for eight additional paramedics and one superintendent. This investment supports growing service demands and ensures continued high-quality emergency response across the City. The investment is funded by the City and County in 2026 with Ministry funding of 50 per cent expected the following year based on the Provincial funding model.
• $82 thousand increase to strengthen Human Resource and Occupational Health capacity, support employee well-being and organizational resilience.  

Changes from the 2026 forecast:

• Capital Plan Resourcing Strategy positions were deferred from 2026 to 2027 resulting in an increase of $176 thousand due to phasing new staffing roles over multiple years.
• Housing pledge resourcing reduced by $157 thousand to reflect the current slowdown in building and development activity.
• Deferral of equity program investments to 2027 ($77 thousand reduction).
• Clerks’ Information and Access Coordinator investment deferred to 2027 resulting ($66 thousand reduction).
• Support technician capacity realignment ($60 thousand reduction).

Service enhancements

Investments included in the 2026 Budget Update:

• $280 thousand investment in Bylaw Officers to increase staffing levels and meet growing service level expectations.
• $80 thousand investment to implement internet voting as an alternative method for the 2026 municipal and school board elections.
• Funding for Community Benefit Agreements to strengthen partnerships and deliver shared outcomes (see further details below).

Changes from the 2026 forecast:

• $77 thousand deferred to 2027 for Transit Control Centre supervisory capacity investment through prioritization and affordability review.
• $61 thousand reduction in the 2026 investment for Bylaw Officers as positions originally planned as Security Guards were converted to Bylaw Officers to meet service level expectations and provide revenue generation opportunities to offset a portion of the cost.
• $66 thousand reclassification in transit technology expertise investment to enhance system performance and support service delivery from operating impact from capital project TC0072 Digital Signs.

Community Benefit Agreements

Community Benefit Agreements (CBAs) support partnerships to achieve key community and City objectives.

Additional CBA investments in the 2026 draft budget update:

• $210 thousand investment to support downtown businesses and vulnerable individuals through the Welcoming Streets Initiative (one year funding).
• $62 thousand for Interrupting waste creation through reuse, repurpose, mending and lending (three-year funding).
• $152 thousand for providing opportunities for active healthy living, volunteering, and support services for seniors.
• $75 thousand for promoting Guelph’s Community Call to Climate Action and activate the community towards our Community Race to Zero goal (three-year funding).

Renewed investments already included in the base budget:

• $88 thousand for administering subsidies to enable children to participate in recreational and leisure activities through the Free to Grow program.
• $91 thousand for supporting ongoing development, growth, engagement and promotion of the arts in Guelph.
• $132 thousand for facilitating collaboration with key organizations in support of substance use issues in Guelph.
• $61 thousand for providing access to data, and coordination to support evidence-based programs, services, and investments.
• $10 thousand for supporting the Guelph Sports Hall of Fame through the nomination, selection, public display of inductees.
• $40 thousand for commemorating Canada on behalf of the City of Guelph by promoting national pride and celebration, animating Riverside Park, and including consideration towards truth and reconciliation.
• $14 thousand to plan and deliver the annual Waterloo Wellington Children’s Groundwater Festival, with the aim of achieving 20% in-person attendance from City of Guelph students.

In addition to the work above, the total amount invested in multi-year CBAs currently underway and included in the base budget is $2.1 million.

Service reductions

The following service reductions have been included in the draft budget update:

Table 8 Tax-supported service reductions (all numbers in thousands of dollars)

Department	Description	Total budget impact of service change
Operations (Public Works)	Elimination of snow removal services for on-street bike lanes.	650
Operations (Parking)	Increase in Parking revenue from transitioning all City parking lots to 24/7 paid parking, replacing the current Monday to Saturday, 8 a.m. to 6 p.m. model. The increased parking revenue has provided for a corresponding decrease in the tax support for Parking.	300
Operations (Corporate and Community Safety)	Increase Parking fines by $5.	120
Parks	Reduction in Parks programming, including the elimination of the Park Steward program.	25
Culture & Recreation	Reduction in Museum and Culture programming.	140
Culture & Recreation	Reduction in Market Square and Civic Events programming, including the removal of Movies in the Park, the City’s Doors Open and Culture Days programming, and the Artist in Residence program.	65
Culture & Recreation	Reduction in Culture and Recreation Youth Subsidies (included in 2026 forecast).	69
Engineering & Transportation Services	Reduction in asset management programming and initiatives including data analysis and insights, asset maintenance practices, and internal programs that will slow the organization’s industry-leading asset management maturity and impact sophistication of developing future budgets. Reduction in active transportation programming and initiatives including discontinuing community events and slowed progress on strategic plan goals related to modal shift, changing community behaviour, and meeting environmental and fiscal sustainability objectives.	254
Facilities & Energy Management	Reduction in the transfer to the 100RE capital reserve fund with a corresponding reduction to capital project GG0261 – 100RE initiatives in the capital budget and forecast for 2026 to 2035.	996
Facilities & Energy Management	Reduction in level of cleaning and meeting/event services provided by corporate building maintenance.	158
Planning & Building Services	Reduction in environmental policy planning.	102
Environmental Services – Solid Waste	Increase in revenue from an additional $10 per tonne increase at the public drop-off for mixed waste (in addition to the previously budgeted 2026 increase).	85
Environmental Services – Solid Waste	Adjustment for IDE Solid Waste Blue Box Transition (included in 2026 forecast).	11
Strategic Initiatives and Intergovernmental Services	Removal of Welcoming Streets one-year contract extension (included in 2026 forecast; proposed one year extension included in Mayor’s Budget Enhancements).	202
Finance	New user fees for overdue accounts receivable, moving utility arrears to tax bill, and changing development securities.	110
Mayor & Council	Reduction in Mayor and Council training.	43
Total	Total tax-supported service reductions	3,330

*May not add due to rounding

Council respectful requests

During the 2025 budget confirmation process, Council respectfully requested that the Mayor consider including the following investments totaling just under $1.7 million (0.48 per cent tax levy impact) in the Mayor’s 2026 Draft Budget Update:

• $815 thousand to build Beaumont Park (PK0198).
• $400 thousand to increase the annual transfer to the Affordable Housing reserve (119).
• $154 thousand to increase annual funding for 100 per cent renewable energy initiatives by increasing the budget for capital project GG0261 by that amount annually.
• $300 thousand in funding for the Guelph Bicentennial.
• $50 thousand to enhance support for Advisory Committee of Council members to cover reimbursements and training expenses.

During 2025, additional requests for consideration in the 2026 Budget Update were approved by Council:

• Funding for the expansion of the Private Tree by-law (April 2025).
• Funding for the development of a mixed-use space including an arts and cultural centre in the former Drill Hall (April 2025).
• Funding for daytime shelter services (May 2025).

The following Council respectful requests are included in the draft 2026 Budget Update:

• $400 thousand increase in the transfer to the affordable housing reserve (119).
• $50 thousand to enhance support for Advisory Committee of Council members to cover reimbursements and training expenses.

Mayor budget enhancements

The following Mayor budget enhancements are included in the draft 2026 Budget Update:

• $210 thousand investment to support downtown businesses and vulnerable individuals through the Welcoming Streets Initiative (one year funding), as referenced above under the Community Benefit Agreements summary.
• $162 thousand increase to transition the Youth Ride Free Pilot and Seniors Ride Free Pilot into a permanent initiative to enhance transit accessibility for youth and affordable mobility for seniors.
• $128 thousand for the community led, City supported G2G Trail connection between Woodlawn Road and Silvercreek Parkway, improving connectivity and recreational opportunities.
• $75 thousand investment to promote Guelph’s Community Call to Climate Action and activate the community towards our Community Race to Zero goal (three-year funding), as referenced above under the Community Benefit Agreements summary.

Capital Transfers

The capital budget is funded through annual transfers from the operating budget to capital reserve funds. Through the 2025 budget confirmation process, these tax supported transfers were significantly reduced to help lower the tax levy, with future forecasts assuming similar annual increases in capital funding. These assumptions are foundational to the development and maintenance of a fully funded capital budget and forecast.

• The draft 2026 Budget Update invests an additional $4.8 million over 2025 into tax-supported capital reserve funds.

Assessment growth revenue

Through the MYB, the City has set assessment growth revenue assumptions at 1.15 per cent of the base budget per year. This rate has remained consistent through the 2026 draft budget update, however, at the time of writing this level of assessment growth has not yet been confirmed. Final assessment growth numbers for 2026 will not be known until the late part of November. For 2026 the total assessment growth estimate accounted for in the budget is $4.04 million. Based on current assessment information from MPAC, a negative variance of approximately $1.8 million is possible. If assessment growth revenue for 2026 is less than 1.15 per cent, the shortfall will be covered by a transfer from the Growth reserve fund (156) and corrected through the 2027 budget update (i.e., it will increase the 2027 tax levy). 

Assessment growth revenue is allocated to City Services and LBSS proportionately with 67 per cent distributed to the City and 33 per cent distributed to LBSS agencies.

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. The date of the next assessment cycle is unknown, but without an announcement in 2025 to date, staff believe it is unlikely to occur for the 2026 taxation year.

Given the slow development activity in 2024 and 2025 to date, assessment growth revenue assumptions for 2027 and future years may require revision through future budget updates.

Hospital Support

In late 2019, the Guelph General Hospital requested funding for capital expansion requirements to address immediate and urgent capital needs. Through the staff report provided at the time, three capital projects were identified, totaling $45 million, with a request for the City to contribute 10 per cent of the total project cost, or $4.5 million. Through the 2020 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.

Through subsequent budget processes, each year Council chose to fund this commitment from the Tax Rate Operating Contingency reserve (180) instead of adding the hospital levy. While 2026 is the last year of this commitment ($750 thousand), the continued use of contingency reserves is strongly advised against due to the low level of funds in the tax supported contingency reserves in comparison with target balances. More information about the status of City reserves is detailed in the Reserve section of the website.

2026 user fee update

The Revenue Budgeting Policy directs that as costs increase, user fees should also increase proportionately to maintain the appropriate cost recovery ratios based on the assessment of who benefits from the service. The 2026-2027 rates, fees and charges guide can be found on the budget website. On average, 2026 user fees are increasing two and a quarter percent over 2025 rates. Some fees have increased at rates greater than inflation, including:

• To address increasing operational expenses and ensure the continued upkeep of public amenities, rental fees for various parks facilities have been adjusted upward.
• Fees associated with the issuance of tax certificates have been increased to better reflect actual cost pressures and ensure consistency with prevailing market rates.
• Solid Waste Services has increased cart, cart exchange, hourly service, bin repair, and construction mixed waste fees.
• Registration fees for fitness, sport, dance programs, and summer camps have been increased to reflect rising program administration costs.
• Pet license fees have been adjusted to support the continued administration of the program.

New fees introduced in the draft 2026 Budget Update include:

• Fire services fees relating to the cost recovery for utility incidents such as natural gas and hydro, enforcement, fire investigations, and plan reviews.
• A new building rental fee has been introduced for the art and pottery spaces at the West End Community Centre.
• Finance fees for the new Utility Billing and Collections division.
• Engineering fees for site plan inspection and application review of commercial and industrial sites.

Two fee categories experienced reductions: the Affordable Bus Pass program and the Youth Subsidy for recreation facility access. The 2.5% reduction in the Youth Subsidy means that approved youth and school groups will pay higher fees in 2026, as the services provided will be subsidized at a lower rate.

A complete representation of the tax-supported operating budget, by department, as well as the details of operating budget requests are available for review in the 2026 Budget Update dashboard.

Non-tax-supported budget

The City’s non-tax-supported budget is comprised of water services, wastewater services, stormwater services, parking services, Ontario Building Code Administration (OBCA), and court services. Like the tax-supported budget, all non-tax-supported budgets were reviewed and updated using the same prioritization criteria. Significant highlights for these budgets are outlined below. Water and wastewater rates also include funding for the City’s commitment to the Grand River Conservation Authority, which is part of the LBSS budget that will be presented to Council in December 2025.

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 rates 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 Guelph’s increased population and jobs targets.

Table 9 draft 2026 Budget Update rate impact for City Services

Rate type	2026 forecast $ millions	2026 forecast rate impact	2026 update $ millions	2026 update rate impact
Rate – City services	9.1	9.82%	9.3	10.14%

The City services portion of the rate includes investment to maintain core service delivery in a growing community in alignment with the Future Guelph Strategic Plan.

Table 10 Breakdown of the City rate services change impact from the 2026 budget forecast to the draft 2026 Budget Update.

Rate Services	2026 forecast	2026 update	Change from 2026 forecast to Update
Base budget inflationary	0.8	0.8	–
Operating impacts from capital	0.1	0.1	–
Growth	(0.1)	0.1	0.2
Service enhancement	1.0	1.0	–
Net operating investment	1.8	2.0	0.2
Capital funding	8.4	8.3	(0.1)
Net impact before rate growth	10.2	10.3	0.1
Rate growth revenue	(1.1)	(1.0)	0.1
Total City rate impact	9.1	9.3	0.2
Total City rate impact (%)	9.82%	10.14%	0.32%

Base and Inflationary Impacts

Investments included in the 2026 Budget Update:

• Inflationary assumptions for compensation and benefit costs, utilities, insurance, fuel, and operating supplies.
• Assumptions for volumetric revenues and Equivalent Residential Units (ERUs)

Changes from the 2026 forecast:

• Additional volumetric revenues in Water and Wastewater for consumption based on most recent information.
• Updated revenues to reflect the current ERUs as the basis for monthly charges in Stormwater.
• Additional revenue from new user fees being implemented related to utility billing.
• Additional compensation impacts from collective bargaining agreements.
• Removal of the federal carbon tax on fuel and natural gas.
• Updates to corporately renegotiated contracts for cellular devices and insurance.

Operating impacts from capital

Investments included in the 2026 Budget Update:

• Phase in of the Water Services Project Manager added in 2025 for the Arkell Carter Management.

There is no change from the 2026 forecast.

Growth and rate growth revenue

Investments included in the 2026 Budget Update:

• Additional fixed, volumetric, and ERU revenue related to growth of $1 million.

Changes from the 2026 forecast:

• Capital Plan Resourcing positions planned for 2026 were deferred to 2027.
• Growth revenue was reduced by $100 thousand for updated projections due to the slowing development.

Service enhancement

Investments included in the 2026 Budget Update:

• A resource investment of a Water Distribution Operator to enhance the City’s Secondary Disinfection Residual program and ensure regulatory compliance with the Safe Drinking Water Act for the distribution system in line with direction from the Ministry of Environment, Conservation and Parks.
• Resources to implement the utility billing and collection team upon the transition of the function from Alectra Utilities Corporation.

There is no change from the 2026 forecast.

Capital transfers

The draft 2026 Budget Update invests an additional $8.3 million over 2025 into capital reserve funds.

The draft 2026 Budget Update reflects decreased investment into capital of $0.1 million compared with the 2026 budget forecast due to a reduction in the transfer to the Stormwater Capital Reserve Fund (359). Further details are available in the capital budget and financial strategy sections of this website.

As part of the 2025 budget confirmation Budget Companion Report recommendations, Council approved staff’s recommendation to assess the long-term capital needs of the water and wastewater services, and the impact on customers of adjusting utility rates between the services to achieve a balanced capital reserve fund forecast for each service.

This work was undertaken in 2025, and the 2026 Budget Update accomplishes the objective of eliminating the deficit in the Water capital reserve fund (152) and reducing the surplus in the Wastewater capital reserve fund (153) by pausing the increases to the Wastewater Capital reserve fund and attributing the forecasted increases to the Water Capital reserve fund to achieve a positive balance in the Water Capital reserve fund by 2032. Further details about the reserve forecasts can be found in the Infrastructure Renewal Strategy. As part of this review, the impact on customers from shifting the capital funding increases to water from wastewater were reviewed and determined to be minimal. Of the over 48,000 metered connections in Guelph, there were 66 locations receiving water only bills (these properties have septic for wastewater service) and 9 locations receiving wastewater only bills (with these properties having private wells for water service). Customers receiving a water only bill would have an average increase of 19.1 per cent in their 2026 water bill, while customers with wastewater only service will see an average increase of 0.3 per cent in 2026.

Water and Wastewater rates include an amount to fund the City’s commitment to Grand River Conservation Authority (GRCA), which is part of the LBSS budget process. The GRCA budget will be included in the LBSS materials for Council approval on December 17, 2025. The average residential billing impact will be updated following the approval of the LBSS agencies’ budgets to include the GRCA impact on budget approval.

The average residential rate impacts over the next four years are provided in Table 11.

Table 11 Average residential rate bill impacts

Rate type	2026 forecast	2026 update	2027 forecast	2028 forecast	2029 forecast
Average Residential Impact	9.82%	10.14%	7.90%	8.06%	5.25%

A four-year average monthly combined increase of $8.34 for water, wastewater, and stormwater is needed to ensure infrastructure is being maintained in a state of good repair, deliver services to a growing population, meet all requirements of the Safe Drinking Water Act, and put our city in a better position to accommodate more severe and frequent storms.

The water, wastewater, and stormwater user rates are impacted by a multitude of pressures as noted above. The average three-person household consumes 180 cubic meters in a year and has an average impervious area of 188 square meters. From a residential bill perspective, the City portion of the monthly increase to the average household for 2026 is estimated in Table 12 .

Table 12 Average residential bill impact

Average Residential Monthly Impact	2026 forecast	2026 update
Increase to the average residential household per month	$9.33	$9.63

Ontario Building Code Administration (OBCA)

The City’s Building Services division is responsible for authorizing all building construction and demolition activities in Guelph. The administration and enforcement of these activities are entirely funded through revenues generated from building permit fees.

The OBCA budget is primarily driven by inflationary pressures and the need to maintain core service delivery for a growing population. The 2026 draft budget update includes a revenue reduction, reflecting a slower-than-anticipated pace of new construction compared to the 2026 forecast presented during the 2025 budget update. This slowdown aligns with a broader provincial trend in the home construction industry, with forecasts, including those from the Province of Ontario falling short of expectations, as reported by CBC News, and with actual OBC revenue for the City in 2024 and 2025 to date.

The building slowdown that began in 2024 is expected to continue into 2026, with housing starts forecasted to fall significantly short of original budget projections. The OBC Stabilization reserve fund (188) is intended to help smooth out volatility and uncertainty; however, after drawing from the reserve in 2024 (1.75 million), with another draw anticipated in 2025 (2.6 million), the reserve is expected to be fully depleted by the end of 2026. The projected year-end deficit for the reserve fund in 2026 is estimated at $963 thousand based on the updated projected revenue and the budgeted draw from the reserve to support OBC operations. Should a deficit occur, interfund borrowing from other reserve funds will be required until it returns to a positive balance.

An in-depth revenue and expense analysis was conducted to update the 2026 budget assumptions, reflecting the slower-than-anticipated building market. Budgeted revenues have decreased by approximately $2.3 million for 2026, even after factoring in anticipated rate increases. Expense reductions were also implemented, guided by a forward-looking approach that aimed to balance current economic challenges with the expectation of future market recovery, all while striving to maintain current service levels. Going forward, a comprehensive analysis of the current fee structure, based on present and near-term market conditions, is being conducted internally. Additionally, a third-party consultant will be engaged to perform a fee study and ensure that current practices and assumptions align with the rapidly changing building landscape.

Parking services

The Parking budget was prepared in accordance with the Downtown Parking Master Plan.

A revised parking revenue model has been proposed through the 2026 Budget Update, increasing projected 2026 revenue by $300 thousand. This adjustment reflects the proposed transition to 24/7 paid parking across all City-owned lots, replacing the previous schedule of Monday–Saturday, 8 a.m.–6 p.m. The increased revenue will offset the tax-based funding currently supporting parking services.

As identified in the Budget Companion Report a review of the parking operating model is recommended to be undertaken as part of the City-Wide Parking Study in 2026.

The 2026 budget update includes a reduction of tax support for parking operations ($300 thousand). Overall, the operation is funded by a mix of parking revenue (94 per cent) and property taxes (6 per cent) in 2026.

Courts Services

The Provincial Offences Court is responsible for the administrative and prosecutorial processes arising from violations contrary to provincial statutes and regulations, and is fully funded though fines and penalty revenues.

The 2026 Budget Update includes the addition of the new Administrative Penalty System for Automated Speed Enforcement (ASE) and Red Light Camera (RLC) programs. This includes staffing, program administration costs, and software fully offset by additional revenue. This change streamlines fine processing, resulting in increased revenue ($654 thousand) and an increase in transfers to the Transportation Reserve (164) ($230 thousand). These funds will support expanded traffic safety initiatives and related capital projects.

At the time of preparing these documents, there is a potential risk that the provincial government may discontinue the Automated Speed Enforcement (ASE) program. If eliminated, this would impact the funding available in the Transportation reserve to implement road safety initiatives and infrastructure improvements.