The city of Toronto's budget committee approved a pair of rate increases Friday as the 2018 budget process got underway at city hall.

The committee approved a water rate hike of five per cent and a solid waste hike of 1.9 per cent, though the committee members also approved a freeze on parking rates.

Water, waste management and parking constitute the city's three fee-for-service programs, which are primarily funded by individual users instead of taxes.

The operating budget for those services amounted to $1.79 billion in 2017, or 14 per cent of the city's most recent operating budget.

The capital budget for those services, which funds larger projects such as construction and infrastructure upgrades, is forecast at $13.27 billion between now and 2026.

'We need to refurbish the entire system'

The five per cent water rate increase was first approved by city council in 2015, and would bump the average Toronto family's water bill by $47 next year, from $942 to $989.

The increased rates are expected to raise an additional $54.4 million for Toronto Water, which will help fund a range of projects including water main replacement, sewage treatment plant upgrades and a basement flooding protection plan.

"We need to refurbish the entire system, and that's what we're doing right now," said budget committee chair Gary Crawford.

Budget Chair Gary Crawford says the money is needed for a number of major infrastructure projects. (John Rieti/CBC)

Coun. John Campbell said that point was driven home after a recent visit to an aging Etobicoke treatment plant.

"You can see clearly when you go to one of those facilities that the money is needed for infrastructure," he said. "Those facilities are so old."

Despite years of rate hikes above five per cent, Toronto Water says the 2018 prices are still competitive with other municipalities around the Greater Toronto Area.

"We still think that's great value for what you're getting," said Lou Di Gironimo, general manager of Toronto Water, which is forecasting another three per cent increase for 2019.

Households encouraged to downsize garbage bins

Single family households will also see a two per cent increase for waste management services, while people living in multi-residential buildings such as condos will see a one per cent hike. The so-called blended rate, which factors in other waste-related increases, averages 1.9 per cent, according to the city.

After the increases, the cost of a small garbage bin for a single family home will be $254.66 and an extra large bin will cost $486.99.

A large garbage bin would cost a household $419.85 in 2018, two per cent higher than current rates. (CBC)

The city is counting on that price difference to encourage more households to opt for a smaller bin, and to more carefully sort out recyclable and organic materials.

"We're suggesting, get down to a medium bin or a small bin and you'll actually save money over the long run," Crawford said.

The higher garbage rates are expected to generate an additional $5.74 million. The waste management department says that will help pay for fleet maintenance and the cost of sorting through increasing contamination in blue bins.

The Toronto Parking Authority is not recommending any increases to parking rates for 2018.

The budget commitee will hear from the public about the rate hikes next week, with the goal of getting the increases fully approved before the end of the year.