What’s missing, and what residents can demand
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What Changed at the Last Minute: Reserve Use to Offset the 2026 OPP Increase
Late in the 2026 budget process, Prince Edward County faced a material and unanticipated cost increase tied to provincial policing.
In early December 2025 — after most budget deliberations had concluded — the Province confirmed that Ontario Provincial Police (OPP) contract increases would be capped at 11 percent, rather than the approximately 6 percent staff had been forecasting based on historical trends. This resulted in an additional $390,500 operating cost pressure for Prince Edward County.
Because this increase arrived after Council had already reduced a previously forecast tax increase, Council elected to address the shortfall through reserve fund transfers, rather than reopening broader budget reductions.
Reader comment: “The OPP probably presents their invoice for services every year so if that wasn’t available in December, why didn’t someone in finance call the OPP & get an estimate instead of being surprised in January?”
Confirmed reserve transfers approved by Council
Council approved the following reserve withdrawals to offset the OPP cost increase and maintain the approved tax levy:
• $143,500 from the Climate Change Reserve
• $150,000 from the Municipal Accommodation Tax (MAT) Reserve
• $97,000 from the Waste Diversion Reserve
Total reserve use for OPP increase: $390,500
These amounts are now clearly identifiable and materially larger than the earlier reserve offsets disclosed elsewhere in the budget process.
What Residents Should Understand About These Reserves
Climate Change Reserve
The Climate Change Reserve was originally established to respond to weather-related infrastructure damage, such as washed-out roads and climate resilience measures. The 2026 transfer fully depleted this reserve, leaving no remaining balance for future climate-related events unless replenished through future budgets. Several councillors explicitly expressed concern during deliberations that emptying this reserve reduced the County’s preparedness for unpredictable weather events.
Municipal Accommodation Tax (MAT) Reserve
The MAT reserve is funded annually through tourism-related accommodation activity and is typically intended to support tourism impacts, events, and related infrastructure. The approved transfer effectively reduced the MAT reserve balance to zero at year-end, relying on future MAT revenues to rebuild the fund. This use raises a policy question: Should tourism-derived revenues be used to offset core policing costs, or should they remain tied to tourism mitigation and investment?
Waste Diversion Reserve
The Waste Diversion Reserve was bolstered in 2025 following the dissolution of the South Hastings Waste Services Board, which transferred $312,574 into the fund. After the 2026 transfer, approximately two-thirds of the reserve remains, meaning this fund was not fully depleted. However, its use to fund policing costs represents a shift away from waste system-related purposes.
Why This Matters: Beyond the One-Time Explanation
Council members characterized the reserve transfers as a “stop-gap” response to an 11th-hour provincial decision, and several emphasized that they did not want this approach to become precedent. That framing is important — but so are the implications.
Key governance questions raised by this approach:
• Structural vs one-time costs: Policing costs are ongoing. Using one-time reserves to fund recurring obligations creates future pressure when those reserves are no longer available.
• Order of decision-making: The reserve transfers were approved without a corresponding review of administrative costs, staffing levels, or internal savings options, raising the question of whether reserves were used before exhausting other levers.
• Depletion of risk buffers: Two reserves were effectively emptied. That reduces the County’s ability to respond to climate events, tourism shocks, or service disruptions without future tax increases.
• Transparency for residents: These transfers were not easily visible in the original budget summaries. Residents had to piece together information from multiple reports and meeting discussions to understand what actually occurred.
Is This Legal? Yes. Is It Good Practice? That Depends.
Under Ontario’s Municipal Act, municipalities are permitted to establish and use reserve funds. The issue here is not legality, but financial sustainability and transparency.
Good municipal practice typically includes:
• using reserves for one-time costs, not ongoing services
• maintaining clear reserve continuity schedules
• avoiding depletion of multiple reserves in a single budget year
• publishing a clear rationale and replenishment plan
In this case, while Council complied procedurally, the reserve use highlights the absence of:
• a visible tax stabilization buffer
• clear affordability guardrails
• a consolidated reserve disclosure for residents
The Bigger Signal: A County With Limited Shock Absorption
One of the most telling admissions during budget debate was that Prince Edward County’s tax stabilization reserve is nearly empty — a fund that in many municipalities holds millions of dollars specifically to absorb shocks like this.
That reality reframes the 2026 reserve transfers: This was not simply a choice between reserves and taxes. It was a symptom of limited financial resilience.
What Residents Can Reasonably Ask Council Going Forward
• Which reserves remain available for true emergencies?
• How will depleted reserves be replenished, and over what timeframe?
• What costs could be reduced before reserves are used again?
• How will future policing increases be funded without repeating this approach?
• Will Council publish a consolidated reserve continuity table annually?
Bottom Line
The 2026 reserve transfers solved an immediate problem — but they did so by drawing down the County’s financial safety net.
Residents are entitled to clear answers on whether this was:
• a one-time exception, or
• a warning sign of deeper structural imbalance.
Transparency, not accusation, is the next step.
Questions Councillors should answer on reserve use (Send an email to your Councillor with these questions).
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- Which reserve funds were used to reduce the 2026 levy, and what are the exact amounts by reserve name?
- For each reserve used, what is the opening balance, the 2026 withdrawal, and the projected closing balance?
- Are any of these withdrawals funding ongoing operating costs rather than one-time items? If yes, what is the plan for 2027 when those one-time funds are gone?
- Were any reserves used for purposes different from their original intent? If yes, what authority/policy/by-law supported that change?
- What cost reductions or service redesign options were evaluated before reserves were used to manage levy impact?
- What guardrails does Council use (or will it adopt) to prevent reserves from becoming a routine substitute for structural savings?
Learn more and take action:
Click here for Council contact information