County taps depleted reserves to finalize 2026 budget

PECConnect
Jan 19
3 min read

Last-minute OPP cost increase forces council to find alternative funding solution

Hands using a calculator and writing in a notebook on a desk with charts. The scene suggests focus and analysis in a workspace.

Prince Edward County has officially approved its 2026 operating and capital budgets, but not without a late adjustment that exposed growing financial strain on municipal reserves.

Mayor Steve Ferguson signed off on the budget on January 13, bringing the process to a close after an unexpected increase in Ontario Provincial Police (OPP) costs forced council to revisit its nearly finalized plan.

Policing cost hike disrupts finalized budget

The issue emerged after the province announced an 11 per cent increase to OPP costs, far higher than the six per cent municipalities had been expecting during budget deliberations.

For Prince Edward County, that translated into an additional $390,000 expense, introduced after council had already completed its budget discussions in December.

Before the increase, the 2026 tax-supported budget called for a 5.32 per cent levy increase. Factoring in the new policing costs would have pushed that number to 6.08 per cent.

Council avoids tax increase by using reserves

Rather than reopening the entire budget or raising taxes further, council opted to cover the shortfall by drawing from several reserve funds.

The approved approach includes:

$143,500 from the climate action reserve
$150,000 from the Municipal Accommodation Tax (MAT) reserve
Approximately $97,000 from the waste diversion reserve

The move allowed council to absorb the cost without adjusting the tax rate, but it came with concerns about long-term financial sustainability.

Financial buffers already running low

Interim CAO Adam Goheen noted that the County’s tax stabilization reserve typically used for unexpected expenses has already been significantly depleted.

“That reserve, which should have millions of dollars, is almost empty,” Goheen said.

The reliance on alternative reserves highlighted the limited financial flexibility available to the municipality when facing sudden cost increases.

Council voices concern over growing reliance on reserves

Several councillors expressed unease about continuing to draw from reserve funds to

manage operational pressures.

Four people in an office are gathered around documents, discussing intently. They wear ID badges, and natural light enters through large windows.

Councillor Chris Braney said the late notice of the OPP increase limited council’s ability to make different decisions earlier in the process.

“My concern is that we are always dipping into reserves,” he said, adding that earlier awareness of the increase might have changed budget discussions.

Councillor Phil St-Jean echoed that concern, while still supporting the decision as a temporary solution.

“I do not like to draw from reserves, and I do not want to set a precedent,” he said. “However, I think as a stop-gap measure, this is the right thing to do.” Councillor Bill Roberts agreed, describing the situation as unavoidable but not sustainable.

“We are in a sticky situation,” Roberts said. “It will definitely have to be a one-time deal. We can’t keep draining reserves.”

Mayor calls decision a necessary compromise

Mayor Ferguson described the use of reserves as a practical solution given the timing of the cost increase.

Reopening the full budget process at that stage, he said, would have delayed key projects and disrupted timelines tied to procurement and legislative requirements.

With the budget now approved, the County can move ahead with planned capital projects, issue tenders, and meet operational deadlines for the year.

Long-term concerns remain

While the decision avoided an immediate tax increase, it also underscored a larger issue: the County’s growing dependence on one-time funding sources to balance ongoing expenses.

With key reserves including tax stabilization and climate funds, now largely depleted, the municipality has fewer tools to respond to future financial shocks.

Takeaway

The County’s 2026 budget is balanced but at a cost. By relying on already stretched reserves to absorb unexpected policing expenses, council avoided raising taxes in the short term, while increasing pressure on its long-term financial stability.