separated storm and sanitary sewers, less storm water will be directed to the treatment plants for processing, which will reduce treatment costs.

Financial Matters:

Operating Expenditures

Sewer Surcharge-funded operating costs are very challenging to reduce in the short term. Many of the processes in the Pollution Control plants are provincially legislated and must meet ever increasing environmental standards. The maintenance of the sewer system is also driven by required repairs, with most being reactionary in nature due to the age of the City's sewer infrastructure. Failing to provide ongoing maintenance will result in more expensive future replacement costs.

It is also important to note that sewer maintenance and repair, drain maintenance, capital budget construction of sanitary, storm, storm relief and combined sewer replacement, and the support required for the above are all traditionally funded by the Sewer Surcharge.

The Sewer Surcharge-funded Operating Budget was reviewed in detail as part of the 2020 Operating Budget process in an effort to reduce costs and identify operating efficiencies wherever possible. In total, operating expenses have increased by $318,502, which represents a negligible component of the overall recommended increase. Details regarding the individual budget issues impacting the Sewer Surcharge can be found in the 2020 Operating Budget documents.

Capital Expenditures

In addition to the operating expenditures, the Sewer Surcharge base budget includes $31.2M in annual capital funding that is used to fund sewer-related capital projects. The City is undertaking a comprehensive study of its' sewer system as part of the Sewer Master Plan. It is expected that the sewer and flood mitigation investments that will be identified in the Sewer Master Plan will be significant. In 2019, Council approved $6M to be included as part of the 2019 Sewer Surcharge budget in order to begin putting money aside to prepare for the project work that is expected to be required.

As part of this budget, Administration recommends that the capital expenditures be increased by an additional $6M in 2020 (which represents 95% of the overall recommended increase) to continue to address the erosion of purchasing power resulting from ongoing inflationary forces and to continue to build on the funding for anticipated Sewer Master Plan work. This increase would bring the total capital expenditure budget to $37.2M.

To further address the City's commitment to funding the highly successful Basement Flooding Subsidy Program, Administration recommends continuing the $2.6M per year in funding allocated to this Program. These contributions will address a projected shortterm deficit and ensure the future sustainability of the Program. These estimates are