Operating grants are provincial transfer payments supporting municipal day-to-day service delivery rather than capital infrastructure projects. These grants help fund ongoing operations like transit services, policing, public health, libraries, or social programs. Unlike capital grants for specific projects, operating grants provide ongoing revenue for annual expenses. Grant amounts may be formula-based (tied to population, assessment, or service costs) or program-specific (supporting particular services). Operating grants help municipalities deliver services without relying solely on property taxes. However, municipal budgets can become vulnerable when provinces reduce grants, forcing property tax increases or service cuts to compensate.