Sarnia’s 2026 Budget: Council funds major rec center, police prep as debt-free goal is shelved

Sarnia City Council amended the 2026 budget, passing three major spending initiatives and increasing the levy to fund an estimated $4.1 million in immediate borrowing costs for capital projects.

Sarnia council amends 2026 budget, passing three major capital swings and setting up a $15 million financial crisis in 2027

Sarnia City Council wrapped up its 2026 budget deliberations on Tuesday, November 25, ultimately approving a property tax levy increase that includes the initiation of two large borrowing measures. The final percentage increase on the levy is 4.63% once borrowing costs are factored in. The total increase in funds raised through taxation is $3 million for the original draft budget.

The most immediate consequence of the votes is that Sarnia will no longer meet its goal of being debt-free by January 2026, a status the Mayor had championed as a key economic advantage. By the time the dust settled, Council had added approximately $4.1 million in new borrowing-related costs and reallocated $2 million in reserved funds to advance major capital projects.

How the budget process unfolded

The 2026 budget was governed by the new strong mayor powers, dramatically changing the process for Sarnia City Council.

The Mayor formally proposed the 2026 budget on November 10, 2025, after directing staff to modify the draft. Under the rules, Council has 30 days to amend the proposed budget through resolutions.

Council chose to accelerate the entire process by passing a motion to terminate the amendment period immediately upon the meeting's adjournment. Starting on November 26, the Mayor now has 10 days to exercise his power and veto any council resolution. If the Mayor issues a veto, Council then has 15 days to call a meeting and override the veto. Overriding a veto requires a two-thirds majority vote, meaning six members of Council must agree.

The three big swings: What council voted to fund

Council moved three significant items from the unfunded list into the 2026 budget, using a mix of borrowing and reallocating capital funds.

1. New police facility: $5 million borrowing

The city police were initially asking for approximately $91 million for a new headquarters. Council settled on a head-start budget.

• Council Action: Council approved moving $5 million to the funded list for the new police headquarters. This initial funding is specifically for essential preliminary work, such as engineering and soil samples.
• Levy Cost: This adds $377,300 to the annual tax levy to cover the first year of borrowing costs, amortized over a 20-year term.

2. BACE Recreation Campus: setting up $4.1 million in borrowing

The proponents of the BACE Recreation Campus—a proposed indoor/outdoor multi-use sports complex—are asking the city for a total of $10 million over five years.

• Council Action: Council approved setting up the financing to potentially proceed with $4.1 million in capital funding in 2026 for the BACE Recreation Campus.
• Levy Cost: This decision immediately adds $886,100 to the levy in 2026 to cover the projected debt servicing costs for the loan. Treasurer Kristen McGill advised the cost of immediately raising the full $4.1 million through the levy would have been 4.68%.

3. Bright’s Grove Library: $2 million restored, no levy hit

The Mayor’s draft had cut the funding for the Library hub, moving it to the unfunded list.

• Council Action: Council voted to restore $2 million for the library expansion project to the funded list.
• Funding Plan: The reallocation of funds means there is zero net impact on the levy. The funding breakdown is:
  • $1,000,000 redirected from the Fire Engine 5 Replacement Fund.
  • $500,000 from the Tax Stabilization Reserve.
  • $500,000 from the Development Charge Reserve Fund.

A $15.1 million warning for 2027

The City Treasurer, Kristen McGill, issued a stark warning about the 2027 budget, which will face massive cost pressures due to the exhaustion of reserves. Over the current council term, $30.2 million has been drawn from reserves to mitigate tax increases. The Capital Reserve Account is projected to be at zero after 2026 transfers.

Without new revenue sources, staff will have to mitigate over $15.1 million in immediate new costs. This is equivalent to a projected 16.27% levy increase. This percentage does not yet fully factor in the new borrowing costs passed in the 2026 budget.

Key operational decisions

• ICI Recycling Cut: Effective January 1, 2026, the city will discontinue recycling collection for approximately 200 non-eligible ICI properties (Industrial, Commercial, and Institutional) located outside the downtown and Mitton Street designated areas. This action saves approximately $45,000.
• Water and Sewer Rates: A motion to cap the combined rate increase at 3% was defeated. The adopted increase raises the water consumption rate by $0.088 per cubic meter, to $0.9938.
• Municipal Grants: Council approved $80,000 to the Sarnia-Lambton Ontario Health Team/Bluewater Health for physician recruitment and retention.
• Dividends Increased: Council unanimously approved increasing the dividend from Bluewater Power by $100,000.