Kitimat council is heading into the 2026 budget process facing growing financial pressure, as reserves continue to decline, debt costs rise sharply, and a proposed tax increase framework begins to take shape.
During budget deliberations earlier this week, council learned that core operating costs are expected to increase by just over $3 million in 2026, a 6.5 per cent rise from the year prior. Staff said wages are the biggest reason for the increase, accounting for $1.29 million, or about 35 per cent of the added costs. Overall municipal wages are expected to rise by 5.2 per cent next year due to union agreements, previously approved staffing, and new infrastructure coming into operation.
Debt payments are the second-biggest cost increase, rising by $703,995, or about 19 per cent of the total. Staff said this is mainly because the new water treatment facility is now entering full repayment, increasing debt servicing costs from zero in 2025 to more than $1.2 million in 2026.
Council was also told that about $643,000, or nearly 18 per cent, of the increase is being set aside for reserves. Other rising costs include RCMP policing, contractors and consultants, community grants, and various operating expenses.
Looking at individual departments, Public Works has the largest increase at $1.75 million, or 16 per cent, followed by Engineering, which is up $565,000, or 14 per cent. Staff said much of this is due to a new payroll system that now assigns wages directly to departments, making some increases appear larger than in past years.
Council raised concerns about falling reserves, with staff projecting balances could drop to about $7.9 million by the end of 2026. That’s down from $27.7 million in 2021 and $18.2 million in 2025.
Councillor Terry Marleau said the trend raises serious questions about affordability and long-term planning.
“I think it is even more critical, and we wonder whether we can afford to fund the particular things that we get requests on… this is a serious, serious priority for us, and that is the maintenance and the building of our reserves,” Marleau said.
Council also reviewed $11.6 million in capital projects planned for 2026, most of which would be paid for using grants and reserves. Staff also pointed to $2.84 million in projects that currently have no funding, warning that delaying some of them, including stormwater repairs, reservoir work, and fire damage cleanup, which could cause significant operational risks
Council also raised concerns about future borrowing, including possible debt linked to a new public safety building.
Councillor Mario Feldhoff said council should hold off on major commitments until the economic outlook becomes clearer.
“I believe that this project must be deferred until we get some certainty on whether or not Phase Two LNG is going forward and what the impact on the projection of taxpayers might be going forward. This is a big concern,” Feldhoff said.
Staff also outlined a proposed 4.79 per cent property tax increase for most homes and businesses, with large industrial properties facing a smaller increase. When averaged across all property classes, the overall tax increase would be about 3.7 per cent.
Council emphasized that these figures are still preliminary, and no final decisions have been made. Budget discussions will continue later this month before the 2026 financial plan is finalized.
