The maximum amount of debt a municipality can repay each year, as set by the Ministry of Municipal Affairs and Housing. The City’s internal policy uses a lower limit to ensure financial sustainability.
Operating Budget 101
This page explains what a municipal operating budget is, how it is developed and adopted, how it is presented and reported, how it affects your property taxes, and what revenues and expenses are included.
What is a Municipal Operating Budget?
Municipal budgets have two components: operating and capital. These components are interdependent, so decisions about one can affect the other. The operating budget covers the City’s normal, day-to-day expenses and revenues needed to deliver municipal services.
How the Operating Budget is Developed
The operating budget is guided by the City’s Strategic Plan, Departmental Operating Plans, and Council-approved initiatives. The following factors are considered when developing the budget:
- Assessment base and growth
- New or enhanced programs and services
- Debt levels from past and committed capital projects
- Non-discretionary pressures and inflation
- Availability of reserves and reserve funds
- Personnel needs
- Asset management requirements
- Obligations to special-purpose bodies
- Budgets of City boards
Budget Presentation
The operating budget is divided into two funding categories:
- Section A: tax-supported services
- Section B: user-supported services (water, wastewater, and parking)
Net spending is broken down into two components as outlined in the Budget & Financial Controls Policy:
- Base Budget: the prior year’s approved budget, adjusted to maintain current service levels, including inflationary changes
- Operating Issues: new programs or services, increased costs, staffing implications, or one-time changes in revenues or expenses
Subsequent Reporting
Departments may continue spending at the previous year’s levels until the new budget is approved. All spending must follow the City’s Purchasing Policy.
Operating results are reported throughout the year at Finance Committee meetings, which are public. The previous year’s operating activities are reported in the City’s audited financial statements and the annual Financial Information Return (FIR) to the Ministry of Municipal Affairs and Housing.
Legislative Requirements
Municipal Act
Under the Municipal Act, 2001, the City must balance its operating budget each year, meaning total revenues must equal total expenditures. To achieve balance, the City may:
- Increase revenues through property taxes or user rates
- Use application-based grants where available
- Manage or reduce operating costs by adjusting programs or services
Asset Management
Operating budgets are influenced by asset management planning, which ensures the City can maintain and replace infrastructure in compliance with Ontario Regulation 588/17. Contributions to capital projects from the operating budget are explained in the Capital Budget 101 page.
Other Legislation
Other laws and by-laws, such as Ontario Regulation 239/02 on minimum maintenance standards for highways, also guide operating activities.
Your Property Tax Bill
For tax-supported services (Section A), the City calculates the tax levy requirement to set the annual tax rate and tax ratios. Education taxes, collected and remitted to local school boards, are excluded.
Tax levy requirement formula:
Expenses – non-tax revenue = tax levy requirement
Taxes are calculated using your property’s Current Value Assessment from the Municipal Property Assessment Corporation (MPAC).
The City has five tax billing areas: Urban Cannifton, Rural Cannifton, Rural to Urban Cannifton, Urban Belleville and Rural Belleville. Core tax-funded services are levied on all areas, while services such as policing, fire, transit and street lighting are levied separately.
The City’s Property Tax Calculator can help you see what services your taxes support.
Revenue
Section A – Tax-Funded
Property taxes are the main source of funding (about 80%).
Some user-pay programs/services are partially funded by way of User Fees collected, such as:
- Permits/planning applications.
- Recreational programs/rentals
- Garbage bag tags
- Licenses
Other revenues include conditional grants, use of reserves or reserve funds, development charges and investment income.
Section B – User-Funded
Water, wastewater, and parking services are primarily funded by user fees, covering over 95% of their costs.
Expenses
Operating expenses include:
- Salaries, wages, and benefits
- Debt repayments on past capital projects
- Materials and supplies
- Contracted services
- Rents and financial expenses
- External transfers
- Contributions to reserves or reserve funds for future needs and asset management
Section A – Tax-Funded
The City reports on its expenses under the following areas:
- General Government: Council & Clerk, Finance, Human Resources, and Administration.
- Planning & Development Services: Planning & Approvals, Building Services, and Economic Development
- Engineering
- Environmental Services: Stormwater, Waste Management, and Pollution Control.
- Transportation Services: Road and Roadside, Structures, Traffic Operations, and Winter Control.
- Protective Services: Fire and Police
- Recreation & Culture: Programs, Facilities, Community Centres, Parks, Sports Fields, Library, and Heritage.
- Health Services: Doctor Recruitment and external contracts
- Social & Family Services (external contract)
Section B – User-Funded
Water and wastewater services are managed by Environmental Services, covering treatment and distribution.
Parking is part of General Government and includes lot maintenance, metering, and enforcement.
Historical Operating Budgets
Detailed operating budgets are available on the City’s Budget & Financial Reports webpage.
Definitions
The following definitions may be referenced when reviewing the operating budget.
A strategic plan describing how the City’s assets are maintained, replaced and funded. It includes asset condition, expected service levels, planned actions and financing strategies.
Infrastructure built by developers (such as roads, water mains, or sewers) that is transferred to the City at no cost. These assets are valued at fair market value when accepted for use and maintained through the Asset Management Plan.
A fee under the Development Charges Act, 1997, charged to fund capital projects or studies needed to serve new growth. These charges follow the principle that “growth pays for growth.”
Financial Information Return (FIR)
The main reporting tool municipalities use to provide financial and statistical data to the Ministry of Municipal Affairs and Housing, as required under the Municipal Act, 2001.
The difference between existing infrastructure and what is needed to meet current and future service levels. When funding is insufficient, it is also called an infrastructure deficit.
Council-approved rules governing how the City acquires goods and services to ensure fairness, transparency, and value for money.
Public Sector Accounting Board (PSAB)
The body that sets accounting standards for Canadian municipalities. These standards ensure consistent reporting in municipal financial statements.
Funds set aside by Council for future use, not legally restricted, but allocated to specific purposes. These funds are typically held in the City’s general bank account.
Funds set aside for a specific purpose, required by legislation, by-law or agreement. They may be obligatory (legally restricted) or discretionary (internally restricted) and are held in separate accounts that earn interest.
A physical asset with a useful life beyond one year, used to deliver services. Examples include buildings, roads, vehicles and equipment. These assets are not intended for sale.
Fees charged to users for services such as water, wastewater, parking and recreation programs, designed so that users cover the cost of the service.
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