An audit of Fauquier-Strickland has found that the community had no long-term plan to finance its operations and capital projects, with council unwilling to raise property taxes to the level that was required. The township nearly went bankrupt in August 2025 after years of drawing on reserve funds and using bank overdrafts just to fund operations. A provincial bailout allowed the community to continue, and an audit was ordered to determine exactly how the financial crisis occurred. The audit by KPMG found that the community ran negative bank balances each year since 2022 and lacked a multi-year financial plan on how it would fund capital projects. “The township has prioritized minimizing annual tax increases to residents without a defined strategy to fund major infrastructure, building repairs or community assets,” KPMG said. “Water and wastewater services are not self-sustaining and rely on the general tax base to address funding gaps. Historically, residential tax rates and utility rates have been artificially suppressed to maintain the appearance of affordability.” Councillors and staff also failed to distinguish between cash owed or expected to be paid to the municipality and cash on hand, creating a cash crunch that depleted reserve funds. The community has about 467 people, which has shrunk by about 13 per cent since 2016. The median age of residents is 59.6, compared to the provincial average of 41.6. When the crisis hit last summer, the township had an accumulated deficit of $2.6 million and could no longer get money from banks. Of the total, $2 million of the deficit was a result of unfunded capital projects since 2022. “The township appears to have used its reserves (estimated at $1.4 million) and certain deferred revenue (estimated at $659,000) to pay for unbudgeted expenses,” KPMG said. “The township has been reluctant to increase its taxes over the years to cover operational deficits and fund the capital projects. It did approve a 26 per cent tax increase in 2024 and a 20 per cent increase in 2025 to help offset this general deficit.” Declining revenue, soaring costs While revenues declined by 23 per cent from 2021 to 2024, expenses increased by 9.9 per cent a year. The lack of cash and planning also led to poor maintenance of facilities, which were only serviced when something broke down and repairs were urgently needed. When the township built a new community centre and medical centre, the projects “were not well-defined or controlled with scope revisions made to accommodate stakeholder interests,” KPMG said. “Delays in advancing the water treatment plant project have increased construction costs due to inflation and required an under-capacity system to operate beyond its limits, resulting in additional cost to meet the township’s water needs.” Staffing has been reduced to save money, meaning township employees don’t have the expertise to oversee capital projects. “Contractors were not consistently held accountable for meeting agreed milestones or ensuring quality of work prior to invoice payment,” the audit said. That lack of staffing also means the township can’t “perform thorough financial analysis and due diligence at a level expected in more resource-equipped municipalities.” The audit makes several recommendations on restoring the township’s long-term financial health, including implementing long-term budget planning and aligning taxation rates with long-term financial demands. Read the full audit here.
