To the Editor,
Rideau Lakers want to know why recommended 2025 tax increases are so high — there’s an easy answer: Because the tax increases in the past few years have been too low.
Keeping tax increases lower than they should have been resulted in more debt. The township’s budget is $24.5 million, which is a combination of operating and capital costs. Operating costs are mostly staff wages, but they also include all the costs associated with running township properties: maintenance and repairs, utilities, insurance, office supplies, travel, rent, vehicles, banking fees, and so on. These are the usual expenses associated with running a township, a business, or our lives. Every year, municipalities also put money away in reserves — savings for big-ticket items we know are coming.
Capital costs are fixed, one-time expenses spent on the purchase of land, buildings, and the construction and equipment needed to deliver township services. It is the total cost of assets necessary to provide the township’s infrastructure and is usually financed and paid for over many years. Capital costs are for building or improving roads and the equipment needed to maintain them. Operating costs pay the operator, buy the fuel, insurance, and so on.
Every year in Rideau Lakes, it takes about $4.7 million of the $24.5 million for roads, vehicles, equipment replacement, and costs associated with buildings and property. That $4.7 million is necessary and expected.
Right now, Rideau Lakes’ infrastructure, which will sooner or later need replacing, is valued at $106 million.
On Sept. 25, 2023, the treasurer reminded council that Rideau Lakes had not been generating sufficient revenue (taxation, transfers, and grants) to cover our annual $4.7 million in capital costs. This is referred to as an infrastructure gap. The township has been borrowing to cover those annual capital costs.
In January 2024, council was told again that, after funding the operating budget, there was only $2.45 million in reserves for annual capital work. But that is only half of the $4.7 million we need. So, every year, we have been short about $1.6 million, which means we’ve been borrowing money to fill that gap.
Rideau Lakes has now added new debt in 2024 in the form of the Portland landfill property, Station No. 2 Fire Hall, and the Portland Hall and Library. As old debt from previous years has been paid off, we haven’t put the money freed up into our reserves to fund the annual $4.7 million in capital costs. Instead, we’ve put it toward paying for the new assets.
Every year we don’t fully fund the $4.7 million, we have to borrow, which increases our debt payments and the costs of financing that debt. Instead of borrowing money and paying interest on $1 million for the Portland Landfill property, we could have had the money to pay for it.
Wendy Alford – Rideau Lakes
