The Niagara Region is forecast to end the year with a $2.2 million budget shortfall.
Councillors sitting on the region's Corporate Services Committee hearing this week, part of the blame is on a police pay hike given to officers by a provincial arbitrator.
As a result of that pay hike, police are now dealing with a possible $3.1 million deficit.
Pay hikes given to police through arbitration have become a growing concern for municipalities across Ontario over the past several years.
The Ontario Association of Municipalities is currently fighting to have the province change the arbitration system so that the financial health of municipalities and their ability to pay higher salaries is taken into consideration.
AMO would like to see arbitrators review a muncipalities property tax assessment, rates of unemployment, social service caseload and median household income before deciding how much more money to give emergency personell such as police and firefighters.