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The water and sewer rate increase will be reflected on residents' next bills.

Summerside water and sewer rates are going up 12 per cent, which means residents will pay about $80 more a year for the utility.

The city passed its $45-million budget Monday night.

For the last few years the utilities keep running a deficit, said Coun. Jeff Sullivan, chairman of the utilities committee.

"Unless we get to a situation where we are able to … wipe out all the accumulated deficits in the utilities and start building a capital reserve over time. Unless we get to that point, you're guaranteeing that future generations are going to have to be saddled with a larger and larger utility debt," said Sullivan.

The rate increase will show on residents' next bills.

Property tax rates will stay the same.

About $12 million will be spent on capital projects, including storm sewer upgrades, sidewalks and streets and money towards a new fire station.

"You know, council has to look at a lot of these projects and to ignore them is the wrong thing to do," said Deputy Mayor Bruce MacDougall, finance committee chairman.

"So we came together as a council and said, even if we have to go out and borrow more money this year, it's something that has to be done. Because if you wait until you can afford them, they're never going to be done."

Some of these costs will be covered with current funds. The rest will either be borrowed and that debt would show up on next year's budget.

Or MacDougall said the city might be able to tap into some federal infrastructure funding.