Public urged to weigh in as Orillia faces $254M capital shortfall

The City of Orillia is preparing for its 2026 budget process, and while it's complex, the city welcomes public input into what projects residents would like to see accomplished next year and beyond.

"We need to hear how you want the money spent ... We need people to contact us and to let us know how you feel about all this stuff," said Coun. David Campbell.

There were just six people in attendance at Monday's public budget meeting and there were also six letters sent to the city, but no one went to the mic to talk about what they would like to see in next year's budget.

During a subsequent special meeting of council for budget preparation, John Henry, the city's treasurer and chief financial officer, presented council with an overview of outside pressures, the new budget format under strong mayor powers and options for the spending/saving formula.

Henry told OrilliaMatters creating a budget is always a delicate balancing act between building city infrastructure and providing needed services while also keeping the tax increase to a minimum, knowing people are facing increased costs of living, citing rent, mortgages and food as examples.

Changes to the budget process under strong mayor powers are three-fold. Mayor Don McIsaac has the power to present the budget. He has directed staff to prepare a budget that maintains or improves service levels "within a budget lower than last year."

Coun. Jay Fallis questioned that idea.

"It's an admirable objective. I think it's always important to be looking at reducing the cost ... but are we creating something that's unrealistic as a vision?" he asked.

"Not at all," replied McIsaac. "I believe it is possible. There's an increased tax revenue we have this year from new properties coming online (more property taxes). We had costs in 2025 that we will not incur in 2026 ... and I think we can increase the level of service or maintain it and reduce the costs year over year.

"If you start out thinking it's not possible, you won't get there."

Another new wrinkle this budget cycle will see the capital, operating and service partner components separated and voted on at different times — September, October and November, respectively — rather than a one-time vote on the whole.

Overview presentations of the budget components will be presented Sept. 22, Oct. 20 and Nov. 13. The goal is to have the budget set by the end of the year.

"The intent is to deliberate the budget into manageable pieces," said Henry. "An early adoption of the capital plan provides some flexibility for first to market in 2026 ... It means we can have better pricing and get those premium contractors available to us."

Also under the new budget format, both councillors and senior staff must present a "business case" for key budget priorities on a timeline. Councillors have until July 11 to file their priorities.

"Staff are required to provide business cases for all proposed operating increases of $10,000 or more," reads the report.

The tax rate increase will be between 1.1 and 7.8 per cent, with a draft budget featuring a three to four per cent increase, according to the report.

"I should say that three to four per cent is probably in line with past averages," said Henry.

The capital budget — one-time costs to build roads and facilities and purchase vehicles and other items — is the first to be set, and it follows the 10-year capital forecast, identifying key projects and expenses. Council members were presented with a large, thick book that is the 10-year capital and reserve forecast.

The capital forecast puts about 50 per cent of available funds toward roads and sidewalks.

Coun. Ralph Cipolla weighed in on his wishes.

"My priorities are roads and sidewalks," said the Ward 2 councillor.

He also asked for phases 3 and 4 of Laclie Street reconstruction to be done at the same time so as to reduce the impact on local businesses.

"It's really, really important. Merchants are saying, 'Please do it all at once,'" he said.

The next two phases are scheduled for 2026 and 2027.

Council is faced with numerous pressures, Henry said, referring to the $254-million capital shortfall by 2034 with several reserve categories falling into negative balances. He looked to council for direction.

Council approved the Option 3 financial strategy from the 10-year capital and reserve forecast update report with amendments. The spending allocations include putting the majority of funds into roads projects — more than $401 million.

The next-largest expenditures are utilities, being water, wastewater and stormwater, valued at $132 million or 16 per cent. These two features account for 65 per cent of the forecast.

The rest of the spending pie includes debt financing (14 per cent), development charges reserves (13 per cent), grants (seven per cent), capital levy (two per cent) and other reserves, representing one per cent.

The 10-year plan includes 791 projects worth $820 million.

Option 3 includes a reduction of $49 million in capital expenditures and maximizes incremental annual reserve contribution increases.

"Healthy reserves are essential to ensuring a municipality's financial health," reads the report.

Debate began about which of the top 20 projects should get cut or reduced, but McIsaac said such detailed discussion can be held further down the budget road.

The biggest budget pressure in recent years has been the increased costs of service providers — Orillia OPP, the County of Simcoe, and the Simcoe Muskoka District Health Unit — which account for about 30 per cent of the levy.

In 2025, police services increased by 7.7 per cent or $709,000, Simcoe County services increased by 13.9 per cent or $1.3 million, and health unit increases came in at almost five per cent.

The provincial government's passing of Bill 17, the Protect Ontario by Building Faster and Smarter Act, may result in reducing development charges for builders. Development charges go to municipalities and pay for infrastructure such as roads and sidewalks around new growth areas. The reduction of development charges provides another pressure for municipal governments.

There will be future public meetings on each of the three sections of the budget as well as online and in-person surveys to seek public feedback on budget priorities.