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Financial Analysis Report

Corporation of the County of Prince Edward (2013–2023)

Executive Summary

This report from the Prince Edward County Residents Association (PECRA) provides a comprehensive review of the financial performance and departmental trends for The Corporation of the County of Prince Edward over the past ten years (2013–2023). Key focus areas include infrastructure, finance, asset management, and water/wastewater services. The report identifies critical trends in debt, infrastructure conditions, service delivery expenditures, and long-term liabilities.

Key Challenges Facing Prince Edward County (2025)

Prince Edward County is grappling with growing financial and infrastructure pressures that demand immediate and strategic responses. The most pressing challenges are summarized below:

1. Aging and Underfunded Infrastructure

  • Over 33% of County roads are in Poor or Very Poor condition.
  • Bridges and culverts are aging, with 35% rated Poor, many near or beyond their intended lifespan.
  • Deferred maintenance has created a capital backlog estimated in the hundreds of millions of dollars, without sufficient reserve funding.

2. Rapidly Rising Long-Term Debt

  • Long-term debt increased 34% in one year (2022 to 2023), growing from $25.1M to $33.6M, largely to fund overdue infrastructure investments.
  • Continued borrowing at this rate risks surpassing debt servicing capacity and constraining future flexibility.

3. New Long-Term Liabilities: Asset Retirement Obligations

  • The County recognized $15.2M in AROs in 2023, primarily related to asbestos, fuel tanks, and environmental remediation.
  • These previously unreported liabilities add substantial risk to the County’s long-term financial outlook.

4. Escalating Contracted Services Costs

  • Contracted services spending rose by 12.7% from 2022 to 2023 alone, with no clear accountability metrics tied to performance or value for money.
  • The increasing reliance on external contractors over internal capacity reduces organizational resilience and cost control.

5. Affordable Housing Pressures

  • Housing affordability is worsening despite a tripling of the County’s housing budget over five years.
  • Limited internal planning capacity and aging public housing units compound the crisis.

6. Environmental and Climate Resilience Risks

  • The County has no dedicated stormwater reserve, increasing flood vulnerability.
  • Landfill management and recycling costs are rising sharply, and environmental liabilities are mounting.

7. Digital Modernization and Governance Capacity

  • IT and legal costs have surged, but gaps in digital service delivery, transparency, and citizen engagement remain.
  • Staff capacity, particularly in planning, HR, and asset management, is stretched thin across multiple mandates.

Conclusion:

Prince Edward County is at a crossroads. Without decisive action on infrastructure, debt control, and service efficiency, long-term financial sustainability is at risk. Coordinated investment, clear prioritization, and innovative service delivery models are urgently needed to secure the County’s future.

Overview of Key Findings

  • Sharp increase in long-term debt from $25.1M to $33.6M (2022–2023).
  • Introduction of $15.2M in Asset Retirement Obligations (AROs) in 2023.
  • Escalation in contracted services expenditures (+12.7% from 2022–2023).
  • Aging infrastructure in roads and bridges with significant portions rated ‘Poor’ or ‘Very Poor’.
  • Increasing inventory levels for internal consumption and elevated financial risks.

a. Departmental Financial Analysis – Public Works & Infrastructure

  • The County maintains 1,046 km of roads with an estimated replacement cost of $695M. Over one-third of the network is in ‘Poor’ or ‘Very Poor’ condition. Bridges and culverts also face significant age and degradation, with 35% rated in ‘Poor’ condition and needing investment.
  • Annual capital expenditures have been increasing to address deferred maintenance but remain constrained by budget limitations and debt servicing capacity.

b. Departmental Financial Analysis – Water & Wastewater Services

  • Water infrastructure includes 111 km of mains, mostly over 38 years old, with a replacement value of $180M. The wastewater network serves 31.5% of properties, highlighting service delivery gaps.
  • System condition varies, and capital plans emphasize replacement of aging pipes, addressing capacity limitations, and environmental compliance upgrades.

c. Departmental Financial Analysis – Finance

  • Long-term debt rose by 34% in 2023, driven by infrastructure projects. Debt levels have grown in recent years, posing concerns for fiscal sustainability.
  • Contracted services rose from $17.1M in 2022 to $19.2M in 2023. Financial reporting remains GAAP-compliant, though growing service outsourcing and debt levels are strategic red flags.

d. Asset Management

  • The 2023 adoption of Public Sector Accounting Standards for AROs added $15.2M in new liabilities. These include asbestos remediation and underground tank decommissioning. Their late recognition suggests past financial underreporting.
  • Inventory for own consumption rose 39% to $1.11M in 2023, possibly due to procurement planning changes or inflation buffering.

e. Risk Management

  • The County implemented a strategic risk management plan addressing financial, cyber, HR, legal, and infrastructure risks. This reflects a growing awareness of integrated governance, though execution and monitoring effectiveness remain to be evaluated.

f. Infrastructure Trends & Lifecycle Concerns

  • Capital asset age and condition profiles suggest mounting lifecycle costs. Bridges average 46 years of age. Roads need an estimated $200M+ in upgrades to raise baseline standards. Budgetary shortfalls remain a key barrier.

g. Long-Term Financial Sustainability

  • Debt servicing, contract inflation, and capital backlog create mounting pressures. While reserves exist, they remain limited relative to infrastructure demands. Strategic investments must be coupled with multi-year fiscal discipline.

Conclusions and Recommendations

The County must address debt growth, infrastructure decay, and long-term liabilities through:

  • Increased capital investment from provincial/federal sources.
  • Asset management updates with condition-based triggers.
  • Debt policy reform tied to affordability benchmarks.
  • Strategic cost controls on outsourced services.
  • Transparency and public engagement around infrastructure deficits.

Department Spotlight

Transportation & Road Services

  • The Transportation Services Department is responsible for the construction, maintenance, and operation of over 1,046 km of roads and supporting infrastructure.
  • Capital investment trends show an increased focus on road rehabilitation, although budget constraints have led to the deferral of several critical projects.

Financial data indicates:

  • Annual capital allocation has ranged from $9M to $13M over the past decade.
  • Over 33% of road surfaces are currently in ‘Poor’ or ‘Very Poor’ condition.
  • Operating costs for snow clearing, resurfacing, and traffic controls increased by 18% from 2020 to 2023.

Key Issues:

  • Backlog of resurfacing projects.
  • High maintenance cost per lane-km relative to peer municipalities.
  • Lack of dedicated revenue tools for infrastructure lifecycle funding.

Recommendations:

  • Review tendering process for resurfacing.
  • Adopt best practices in resurfacing from other jurisdictions.
  • Benchmark costs for similar projects in other jurisdictions.

Environmental Services

Environmental Services oversees waste collection, landfill operations, recycling programs, and stormwater systems. The department has experienced financial volatility due to fluctuating recycling revenues and increased landfill maintenance costs.

Trends:

  • Waste management operating expenses rose from $4.2M in 2016 to $6.1M in 2023.
  • Per-tonne waste diversion improved slightly from 42% in 2019 to 47% in 2023.
  • Stormwater management has no dedicated reserve fund, posing long-term flood risk concerns.

Recommendations:

  • Implement user-fee reviews and full-cost recovery strategies.
  • Accelerate landfill closure and post-closure liability planning.
  • Invest in green infrastructure for stormwater resilience.

Community Development & Housing

This department manages planning, affordable housing, and community revitalization. With rising housing insecurity, the County has invested in collaborative housing projects and incentive programs.

Financial Indicators:

  • Affordable housing budget increased from $850K in 2018 to $2.6M in 2023.
  • Rental subsidies grew by 25% over five years.
  • Cost-sharing with non-profits and provincial partners leveraged $6M in new developments.

Challenges:

  • Aging public housing stock with deferred maintenance.
  • Limited in-house planning capacity to meet development pressures.
  • Increasing demand for social supports during economic downturns.

Emergency Services (Fire & Paramedics)

The Emergency Services Division includes fire protection and paramedic response. Service demand has grown with population increases and aging demographics.

Trends:

  • Operating costs rose from $6.8M in 2015 to $10.4M in 2023.
  • Fleet renewal investments exceed $1.5M annually.
  • Response times remain within provincial standards but face rural geography constraints.

Recommendations:

  • Modernize facilities and training programs.
  • Explore regional service integration models.
  • Leverage grants for EMS equipment upgrades.

Corporate Services & Governance

Corporate Services oversees governance, legal, human resources, and IT. This department supports transparency, fiscal management, and modernization efforts.

Key Metrics:

  • Corporate IT investment has doubled since 2019 to support digitization.
  • Annual HR costs now exceed $2.1M, driven by retention programs and benefit plan escalations.
  • Governance-related legal expenditures have increased by 40% from 2020 to 2023, partly due to litigation costs.

Strategic Priorities:

  • Expand digital service delivery and cybersecurity.
  • Formalize talent succession planning.
  • Strengthen public reporting and engagement platforms.

Strategic Action Plan: Short, Mid and Long-Term

This section outlines a phased action plan to address financial sustainability, infrastructure renewal, and service delivery improvements for the Corporation of the County of Prince Edward.

Short-Term (0–12 Months)

  • Conduct a debt servicing capacity review and adopt new debt management guidelines.
  • Complete condition assessments for roads and bridges rated below ‘Fair’.
  • Update procurement policies to improve cost-efficiency and inventory control.
  • Implement quick wins in waste diversion (e.g., organic waste pilot).
  • Launch public engagement campaign on fiscal transparency and capital needs.
  • Formalize interdepartmental working group on asset lifecycle costing.

Mid-Term (1–3 Years)

  • Roll out infrastructure rehabilitation plans based on criticality and risk.
  • Expand affordable housing partnerships with non-profits and provincial programs.
  • Establish reserves for stormwater infrastructure and asset retirement obligations.
  • Digitize core services across planning, licensing, and public works.
  • Develop a capital funding strategy including grant alignment and levy adjustments.
  • Upgrade emergency services equipment and optimize fleet operations.

Long-Term (3–10 Years)

  • Achieve lifecycle-based budgeting for all core infrastructure assets.
  • Reach service level targets in road, water, and wastewater systems.
  • Replace or retrofit all critical bridges and culverts in ‘Poor’ condition.
  • Transition to full-cost recovery models in utilities and solid waste.
  • Establish long-term workforce planning across all departments.
  • Institutionalize risk-based capital planning and resilience modeling.

An invitation to make a difference

We are a grassroots coalition of dedicated volunteers who are committed to serving the collective interests of all full-time residents within Prince Edward County, Ontario. Wanted: Individuals with technical skills are encouraged to join us, especially those with legal, finance, accounting, planning, public relations, marketing, and other relevant backgrounds.  Here are some examples of profiles.Your ability to engage residents, ask the hard questions, and push for transparency would be highly valued by PECRA. Whether it’s voicing concerns about infrastructure projects or facilitating discussions on local issues, your contributions will be pivotal in shaping community dialogue.

Link to volunteer form->

Volunteer with PECRA

Our mission is to foster a vibrant, inclusive, and sustainable community by promoting active civic engagement, ensuring transparent governance, and advocating responsible development that reflects the shared values, history and needs of our community. With your passion and proven track record, you will be uniquely positioned to lead some of the work of PECRA or contribute in a leadership role. As we aim to build a grassroots organization that champions fiscal responsibility, transparent governance, and sustainable development, your vision and energy would be invaluable.

We are assembling a growing informal group of interested individuals with strong professional skills. Our plan is to start with informal no-obligation monthly meetings—somewhat like a social book club—where we can gather at a local pub to discuss matters related to Prince Edward County without a prescriptive agenda. We believe PECRA’s mandate will organically form from these discussions of a committee team. PECRA is still in its formative stages. We’re working on defining our mission, vision, and assembling a core leadership team. Your leadership could guide PECRA to become a powerful advocate for all County residents.