Kawartha Lakes projects $10.7M operating deficit as winter costs climb

Staff outline a path to contain shortfall before year-end

Council voted to receive a report from city staff projecting a $10.7-million deficit in its 2026 operating budget, with winter road maintenance, fleet costs, fuel prices and delayed tax revenues among the major factors driving the shortfall. 

The report also includes several possible strategies to reduce the deficit, including writing off legacy construction holdbacks, drawing further on reserves, pausing targeted service programs, redirecting surpluses from completed capital and special projects, and selling surplus vehicles and equipment. 

Unlike the capital budget, which typically covers infrastructure and other major projects, the operating budget tracks routine income and expenses for a single fiscal year. 

During a recent meeting, council heard a second-quarter budget variance report from Adam Found, the city’s chief financial officer, providing the first financial outlook for Kawartha Lakes’ 2026 operating budget. 

Based on financial results as of June 30, staff say the city’s operating budget is trending towards a $10.7-million deficit by the end of the year. 

When the 2026 budget was approved in November, it included an approximately $7.5-million target for planned “budget efficiencies” – savings and other measures intended to reduce costs or increase revenue.

Staff have identified approximately $6.9 million in savings and efficiencies so far, representing 92 per cent of the $7.5-million target and leaving about $600,000 still to be found. 

According to the report, winter control is the largest pressure facing the budget. 

The 2026 budget has $11.17 million earmarked for winter control, but costs had already reached $11.57 million by the end of the second quarter. Staff are forecasting total year-end costs of $15.17 million, resulting in a projected $4-million deficit. 

“Winter control is notoriously volatile,” Found told council, adding the final deficit from winter control could range from $3.5 million to $5.9 million. 

Other budget pressures identified in the report include a projected $1.5-million deficit related to municipal vehicles and equipment. Staff attribute the pressure to growth in the size and complexity of the municipal fleet, as well as staff vacancies. 

Following the presentation, Ward 4 Coun. Dan Joyce asked Found if the city would be able to find the remaining savings needed to reach its $7.5-million target. 

“What’s your confidence level that we’ll achieve another $600,000 (in savings)?” Joyce asked. 

Found said he was “fairly confident” the target would be met. 

“We have those legacy construction holdbacks; I think that’s going to be worth about $400,000 or $500,000, so I think right there we’re pretty much at the target,” he said. 

Ward 7 Coun. Charlie McDonald commended city staff for the report and their focus on reaching the savings target. 

“It’s really nice to see that we have a strategy and that we’re not going to be dealing with this at the end of the year like we usually do,” he said. “It’s nice to see that you’re ahead of it and that you’ve got things under control.”