Municipal Budgeting, Borrowing and Taxation

In all three of the current Acts that govern municipalities in Prince Edward Island, the main tool for ensuring that expenditures are budgeted and accounted for is the approval of the annual budget. 

Adopting a Budget

As a result of an amendment to the budget approval provisions (Section 36) in the Municipalities Act, all municipal councils now have the authority to vote on the annual budget of the municipality rather than requiring a vote by residents. The budget approval/adoption process may occur at any time prior to March 31st . For further details on the municipal budgeting process and for a sample budget, please see our Information Sheet on Municipal Budgeting.

Setting the Tax Rate

As part of the budgeting process, council must calculate anticipated expenditures and revenues. Once anticipated revenues (i.e., grants, user fees, etc.) have been determined, council must set the final municipal tax rate in order to raise the remainder of funds that are required to ensure a balanced budget as no council has the authority to adopt a deficit budget. On or before March 31st in each calendar year, every council must notify the Provincial Tax Commissioner of the approved final tax rate. Under the Real Property Tax Act, a council must notify the Minister of the final municipal tax rate by the prescribed date. If a council fails to do so, the Minister will levy the tax at the rate approved by council for the previous year.

For more detailed information on setting your tax rate, please see our Information Sheet on Setting your Tax Rate.

Annual Meeting

The requirement for community councils to hold an annual meeting remains in effect. The annual meeting is the time when the financial statements, audit, budget and tax rate are shared with the public. If the municipality has budgeted expenditures of less than $50,000 and will be dispensing with the audit requirement, a resolution to that effect must be passed by council at the annual meeting. For 2017 onward, should a municipality decide to dispense with the audit requirement, it is now required, instead, to appoint an auditor to undertake an review engagement.

Borrowing Money

Municipalities are not required to seek the Minister’s approval prior to borrowing. It is the responsibility of the municipality to ensure that the amount does not exceed the borrowing limit established in legislation. Our Information Sheet on Municipal Borrowing highlights the relevant borrowing provisions for towns, communities, and cities.

Openness and Transparency

While the requirements in current PEI legislation are very specific and narrow, many municipal councils on Prince Edward Island go above and beyond what is required under legislation to ensure that there is an adequate amount of transparency and accountability for their residents. Our Role of Council in Financial Matters Information Sheet can provide you with some recommended additional practices your municipality should consider to ensure a reasonable amount of accountability and transparency is offered to residents and members of council. 

Published date: 
April 6, 2017
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General Inquiries

Municipal Affairs and Provincial Planning
2nd Floor, Aubin-Arsenault Building
3 Brighton Road
PO Box 2000
Charlottetown, PE   C1A 7N8

Phone: (902) 620-3558
Fax: (902) 569-7545

municipalaffairs@gov.pe.ca