Esquimalt council is once again in budget season, and dealing with a difficult 13% draft budget that staff have presented. A big part of the proposed budget increase (3% of that 13%) is related to increases in funds being set aside to support the Township’s capital budget. I will be making another post soon detailing some of the other drivers. None of these decisions are easy.
Please note that these comments are purely my own, and don’t reflect the opinions of Council as a whole or of other council members. I pull data from publicly available sources, and any mistakes are 100% my own.
Local governments, like many (or most) companies, have both an operating and a capital budget. The operating budget covers things that happen every year—like staff salaries, utility costs, and routine repairs and maintenance. The capital budget is for major expenses on things that have long lifespans: new construction, and major repairs or replacements of vehicles, buildings, underground pipes, and roads that are expected to last 10–80 years.
Because some projects take multiple years to complete—and multiple years to save for—the capital budget can be highly variable (for example, right now we are spending a lot to complete the Public Safety Building). In order to smooth out expenses over time, we allocate money to capital reserves that can be drawn down in future years for capital projects.
As an example, this year we are going to spend $2.1 million to replace the floor, the underslab refrigeration system under the ice, and the boards and glass at Archie Browning. Other projects proposed this year include $1.5 million in sanitary sewer renewals, and approximately $1.3 million for HVAC and roof replacement at the Recreation Centre.
In 2025, the Township of Esquimalt allocated approximately $4.8 million to capital reserves and $2.1 million to debt servicing (for the Public Safety Building), for a total of about $6.9 million out of a total operating budget of roughly $51 million—or about 13.5% of total spending.
Since being first elected in 2022, staff have been telling Council that Esquimalt faces a looming infrastructure deficit. Our roads, sewer mains, stormwater pipes, and recreation facilities are all aging and require maintenance, and over many years, successive Councils did not set aside sufficient reserves to fully fund repair and replacement. Financial and infrastructure planning was largely done on a year-to-year basis, without a clear long-term view of financial implications of deferring maintenance.
Over the past three years, Council has approved external reports that bring together the state of our infrastructure and the long-term financial implications of maintaining it. This includes estimates of how much we should be setting aside each year to keep on top of it. For those familiar with stratas, this is similar to a depreciation report.
These reports are based on camera inspections of underground pipes, detailed assessments of road conditions, and inspections of all of our buildings. As an example, here’s a map showing the condition of Esquimalt’s road network:
Original (and the whole report) is available at https://www.esquimalt.ca/municipal-services/roads-sidewalks-boulevards
For the first time, these reports have been used to develop a long-term financial model for capital spending—essentially, how much we should be spending on average each year.
It’s sobering:
Source: https://esquimalt.ca.legistar.com/View.ashx?M=F&ID=67924&GUID=C69DC2E8-9873-4B70-808F-3DB3A7A0295F from Council’s February 2 2026 meeting.
The red line is our existing budget for capital spending on Engineering & Public Works and for Parks & Recreation, while the bars are estimated spending needs over the next 20 years. Note that this does not include spending on fleet (replacement of garbage trucks, fire trucks, etc.)- that’s a separate discussion:
Source: https://esquimalt.ca.legistar.com/View.ashx?M=F&ID=67924&GUID=C69DC2E8-9873-4B70-808F-3DB3A7A0295F from Council’s February 2 2026 meeting.
The above two graphs shows our current trajectory if we don’t increase our contributions.
There are a lot of uncertainties in these financial projections. Some assets could last longer than predicted; some projects could cost less. However, the core message from staff is that we should be spending a minimum of $10 million per year on capital replacements, rather than the roughly $4.7 million we are currently spending. This does not include the capital deficit created by past deferments.
To address this gap, staff are proposing a 3% tax increase this year, and in every subsequent year. For 2026, this would increase our contributions to capital reserves from $4.8 million to $6 million. We are already behind where we should be—deferring these contributions now just means we will have to save more later.
This is also where individual capital projects sometimes get conflated with the broader tax discussion, so it’s worth clarifying one example that often comes up.
One project that often comes up in discussions is the upcoming Phase 2 of the Esquimalt Road corridor work. While it is sometimes framed as a “bike lane project,” it is occurring on a stretch of road identified as being in very poor pavement condition, with underground infrastructure that is also due for renewal.
Of the approximately $3.7 million approved for the project to date, staff estimate that roughly 26% is for repaving, 26% for underground infrastructure renewal, 16% for crossings and signals, and 17% for pedestrian improvements, with about 15% associated with cycling infrastructure. Final design decisions have not yet been made.
Because funding for this work was allocated in previous years, removing or delaying the project would not eliminate the underlying replacement costs — it would largely defer them, often at higher cost later.
I don’t pretend that these numbers are comfortable, or that the assumptions behind them are perfect. But taken together, the reports present something we haven’t consistently had in the past: a clear, long-term picture of Esquimalt’s infrastructure obligations and the financial implications of meeting them.
For many years, decisions about capital funding were made without this kind of consolidated, forward-looking view. Having it now doesn’t make the choices easier—but it does make them more honest.
Capital reserves exist precisely so that we can plan for long-lived assets in a responsible way, rather than responding piecemeal as assets fail. Increasing contributions is an attempt to move toward that kind of planning and to begin closing a gap that has built up over time. What’s harder to dispute is that delaying action simply shifts larger costs—and fewer options—onto future councils and future residents.