A budget is an official statement about how much an organization plans to spend during a set period of time and how it will pay for expenses. Municipalities are legislated by the Municipal Act, Ontario to prepare a balanced budget; money received must equal money spent.

The operating budget is a financing plan for the City’s day-to-day operations such as snow removal, road maintenance and fire services.

The capital budget is a financing plan for construction of new or rehabilitation of existing assets such as buildings, roads and parks.

Municipal services are funded by various revenue sources including property taxes, provincial grants, fees for services (i.e. building permits, licenses) and user fees (i.e. recreation programs).

Capital projects are funded by property taxes, reserve and reserve funds, federal and provincial grants, debt and development charges.

Reserve and reserve funds are amounts set aside for specific purposes. Development charges are set amounts developers are required to pay and are used to fund a portion of growth-related capital costs(i.e. new subdivisions).

Assessment growth is produced from new homes and businesses moving into or opening in the municipality which generates new property taxation revenue. The new taxes are used to partially cover the cost of services (i.e. snow removal, garbage collection, etc.) delivered by the municipality to the new properties.

Debt is an instrument used by many businesses and governments to provide financing for various initiatives. The City uses a mix of both external and internal debt within prescribed limits. The repayment of debt is managed through the City’s annual operating budget.

The operating budget is prepared using a base budget approach that considers cost pressures on programs and services currently being delivered. Some of the factors applied to the base budget are as follows:

• Gapping savings – Salaries and benefits are initially budgeted at the maximum pay rate then reduced for positions that are vacant or have not reached the maximum pay rate.
• Inflation – Annual inflationary increases applied to the operating budget range from 1.5% to 6.5% for commodities such as utilities, fuels, supplies, contracted services, maintenance used by the City.
• External Agencies – The City contributes funding to specific agencies that provide various recreation and cultural services to its residents. These agencies are Oshawa Senior Citizens Centre, Oshawa Public Library, Parkwood Foundation, Oshawa Historical Society and the Robert McLaughlin Art Gallery.