Rising cost of fuel could impact next year’s tax increase in Region of Waterloo

The impact of the rising cost of fuel on the Region of Waterloo’s budget is so severe, staff say it may need to be reflected in next year’s property tax increase.

The region operates a large fleet of vehicles, from transit buses to waste collection trucks, so variations in the cost of fuel are felt sharply.

Gas prices in Ontario are expected to jump by 10 cents later this week, the latest increase in a year full of record-setting highs.

“The pressure that we’re seeing on the cost escalation side is probably like nothing we have ever seen,” said Craig Dyer, commissioner of corporate services and chief financial officer for the Region of Waterloo. “Those economic conditions are just placing massive pressure on that budget.”

The current price of diesel is about 50 per cent higher than what the region budgeted for this year, Dyer said. The price of gasoline is about 20 per cent higher.

Transit is one of the biggest pieces of the regional fuel budget, and diesel costs are going to drive up the number in next year’s budget.

"As we go through the 2023 budget deliberations and make recommendations for council to approve, it will definitely include a reflection of the increased price for diesel," said Neil Malcolm, acting director of transit services.

The region says so far, high fuel costs have not impacted service levels and Grand River Transit is working on other solutions like adding hybrid buses to their fleet and testing out electric ones.

"We continue to provide the planned level of service throughout the Grand River Transit system and family of services. But we are very cognizant of the fact that the price is significantly higher than what we budgeted for this year," Malcolm said.

Regional staff are already eyeing an eight to 11 per cent tax increase next year. Where the final number lands could depend a lot on the cost of fuel.

Regional staff also say provincial gas tax allocations are not keeping pace with fuel costs, and they’re requesting council ask the province for more to help keep up.