Windsor councillor questions 0% tax increase as city projects $5.5M deficit

2026 Budget for Windsor, Ont., Dec. 18, 2025. (Sanjay Maru/CTV News Windsor)

The City of Windsor is forecasting a nearly $5.5 million shortfall in its 2026 operating budget and one city councillor says the deficit is directly connected to council’s decision to approve a 0 per cent tax increase.

On Monday, Coun. Kieran McKenzie raised the concern as council reviewed its second-quarter budget variance report.

“This year, we did zero per cent. There’s a budget variance that’s $5.4 million,” McKenzie said. “What does that represent in terms of levy? Somewhere in the range of 1 to 1.2 per cent.”

Council approved a 0 per cent municipal tax levy increase for 2026, with the budget relying on a number of revenue projections and risk-based assumptions.

“We as a council all collectively made a decision here to support a zero per cent tax increase,” McKenzie said. “This is now some of the outcomes of those decisions.”

Transit Windsor accounts for most of the projected shortfall, with a $5.12 million deficit expected by year-end, excluding fuel.

That includes $3.18 million in lower-than-budgeted revenue, along with higher costs for overtime, vehicle maintenance, security, and other operating expenses.

Janice Guthrie, city treasurer, said the transit forecast is based largely on first-quarter results when ridership was lower than expected due to cold weather and a continued decline in international students.

Preliminary second-quarter figures show ridership has since rebounded among youth, adults, and seniors. Post-secondary student ridership continues to lag.

The city is also projecting a $1.26 million deficit in Windsor Fire and Rescue Services operations, largely because of overtime tied to Workplace Safety and Insurance Board claims and other absences.

Another $1.62 million pressure is being attributed to fuel costs.

Several favourable variances are helping reduce the overall deficit, including roughly $2 million more than expected from interest and penalties on overdue property taxes.

Guthrie said that surplus reflects residents falling behind on their tax bills, with late-payment charges amounting to approximately 15 per cent annually.

The city could also defer a planned $2.02 million transfer to its Budget Stabilization Contingency Reserve.

If more money is required, administration could draw from the reserve itself, which currently contains approximately $5.2 million. The report warns that using it to cover the projected deficit would exhaust the fund.

Mayor Drew Dilkens said some of the pressures are outside the city’s control and each budget year presents different circumstances.

“This was the year that we did a zero budget,” Dilkens said. “Every year is going to be different and you’re going to have to evaluate the circumstances in front of you and the different issues that you have to deal with.”

McKenzie said the report shows the connection between council’s budget decisions and the financial pressures now emerging.

“It’s important to remember and for everyone to recognize that all of these things are connected,” he said.

City council approved the 2026 budget on Jan. 26.