Cambridge councillors will finalize the 2024 budget Tuesday after spending a day debating a proposed tax hike that could rise if a motion to introduce a 1.25 per cent infrastructure levy is added to cover a mounting backlog of projects to replace aging infrastructure.
Chief financial officer Sheryl Ayres told council the backlog suggests the city has not been keeping pace with rehabilitating or replacing the $3.8 billion in infrastructure the city owns, and the resulting funding gap is only expected to grow as planned studies identify more priority replacements.
"It's critical the city implement a long term strategy to provide increased funding" to its infrastructure assets to compete with other capital projects, she said.
City infrastructure include core assets like roads, water distribution and wastewater collection systems, which account for 80 per cent, and non-core assets like parks cemeteries, libraries and recreation facilities, which account for 20 per cent.
About 70 per cent of those assets are rated in good condition, meaning the other 30 per cent will need to be replaced over the next decade, creating what's commonly referred to as an "infrastructure gap."
Coun. Ross Earnshaw motioned to support a staff recommendation to increase the city's capital levy reserve contribution from 4 per cent to 6.6 per cent each year, coupled with a 1 per cent tax levy increase from now on.
The resulting 1.25 per cent increase in the tax levy would add over $1.3 million to the city's coffers to reduce the gap, which Earnshaw said he was shocked to learn grew to $190 million last year.
It limits the city's ability to meet an annual standard of replacing 13 kilometres of deteriorating roads and in-ground infrastructure to less than half of that target.
For taxpayers the new levy would equate to an additional $19.22 on the tax bill for the average assessed home.
That's on top of the $90 from the proposed 5.76 per cent hike in this year's budget.
Over the next 10 years, those contributions would succeed at whittling down the mounting infrastructure gap from an estimated $295 million to $204 million, Ayres said.
The CFO also suggested council consider allocating year end surpluses towards replacing aged and failing infrastructure to further reduce the gap.
Support for the infrastructure levy would push the city's portion of the tax hike to 7 per cent and Mayor Jan Liggett is adamant there is no more room to reduce projects or services in a budget she worked closely with staff to produce under Strong Mayor powers from the province.
"I can tell you safely this is the best budget we could have possibly seen," she said. "There is no more fat to cut. There is no fat left."
Thursday's meeting began with a presentation from Ayres and an explanation that a 5.76 per cent increase on the city's portion of the tax bill doesn't mean ratepayers will see that impact on their tax bills since it's just one component of the overall amount.
The city's share is 36 per cent, with the region collecting 52 per cent and school boards 12 per cent.
It means the direct impact on the city portion translates to an overall 2.07 per cent increase this year, or $90 on the average assessed home value of $333,200.
The region's portion, with the approved budget increase of 6.94 per cent, translates to a $169 hike on the average homeowner's bill, or a 3.61 per cent impact.
With the school board portion still subject to change with a prescribed rate set by the province, Cambridge ratepayers can expect to pay at least $249 more on this year's property taxes, an overall 5.68 per cent increase.
For a home assessed at the average value as determined by MPAC, that'll be about $4,600 in 2024.
"The estimated property tax impact for an average household over the next three years through to 2027 ranges between two and three per cent, which is typically in line with the rate of inflation," Ayres said.
The city's target increase in 2025 is 7.52 per cent, followed by two years of rate hikes in the range it is now.
Those increases include anticipated operating impacts from capital projects, including the new $108 million rec complex, which is driving "a significant portion of the forecast," as well as the Preston Aud expansion and debt charges, she added.
They are not the only increases ratepayers will see on their tax bills.
Water utility rates will rise 4.21 per cent this year, pushing the rate paid by an homeowner with average monthly consumption of 170 cubic metres up $46 annually to $1,137.
Ayres said this will cover gross expenditures in the budget of $80.4 million.
Close to half the increase covers water and wastewater treatment provided by the region while the other half goes toward maintaining the city's water and sewer network.
The increase is higher than the city's long range financial plan due to inflation and other factors related to hikes at the regional level. The city's forecast was created in 2019 and projected a combined increase from water and sewer of 3.9 per cent. It's getting an update this spring.
The capital investment plan this year is $167.7 million across 84 projects.
The rec complex comprises the bulk of that money with $102 million going toward that project this year.
In calling for a $2 million budget reduction that ultimately failed, Coun. Helen Shwery said the "disturbing trend" of tax increases at a rate higher than inflation, during an affordability crisis, is reflected in the growing number of residents who are in arrears on their taxes and can't afford to stay in their homes.
She asked the city to consider a policy that focuses on needs over wants to address the concerns she's hearing from the community about sustainability and affordability.
"Just so everybody realizes, the city's portion of this is $7.50 a month added to their tax bill," countered Liggett. "So, It is affordable. For what we are giving the residents of this community. It is affordable"
"In this region we should be proud of this budget, not trying to make our staff out to be people that didn't work hard enough."
City manager David Calder said staff was directed by council to bring a budget back that achieved a certain percentage, which staff exceeded by keeping the overall impact below the rate of inflation.
He said reducing the budget by approximately $2 million would need to come with some suggestions on what services council doesn't want the community to have.
"We've done as much as we can to satisfy your mandate," he said, adding the budget includes some great facilities to the community in terms of health and recreation; services that have been missing in Cambridge for a long time.
Coun. Scott Hamilton asked for a status update on Bill 23 now that proposed audits have been cancelled that promised to make communities whole after losing millions to discounted development charges through the legislation.
Ayres said she welcomed an audit to demonstrate to the province some of the challenges Cambridge is facing due to Bill 23, but hasn't been contacted by the ministry.
Liggett said she's confident Bill 23 will be made into law within weeks, saying mayors have pushed for it expecting it will help resolve funding issues.
She also praised staff and said she communicated with them throughout the budget process.
Staff recommended moving up the date to purchase a new rescue fire truck from 2025 to 2024 to take advantage of a pre-payment discount of $150,000 USD on the $1.78 million CAD purchase if paid by Feb. 15.
Delivery of the new fire truck is estimated to be three and a half years after payment is received.
It won't impact this year's taxes since the city will fund the purchase by dipping into its fleet equipment reserve fund, which has a balance of $4.8 million.
Coun. Scott Hamilton motioned to approve moving up the purchase to realize the discount and Mayor Jan Liggett said she thinks taxpayers will appreciate the "quite substantial" savings on a purchase that had already been approved for 2025.
