Hamilton ends 2020 with $50-million surplus amid pandemic

The city plans to park $20 million in a COVID-19 reserve as it continues to battle the ongoing pandemic after ending 2020 with a $50-million budget surplus.

Last year was unprecedented" with dips in revenue amid scaled-back services and tens of millions in government funding, Mike Zegarac, general manager of finance, told councillors Thursday.

In June, staff predicted COVID-19 would leave the city with a $62-million budget hole, but cost-cutting efforts and pandemic-relief dollars from senior levels of government left the city with a $55-million surplus.

That's a significant swing," Zegarac said.

A deficit of about $4.6 million in the city's rate-supported budget, however, landed the 2020 surplus at roughly $50 million.

So far, the city has received $206 million in funding from the federal government (about 80 per cent) and province (20 per cent) to respond to the pandemic.

It has $141.3 million left to draw upon in 2021, although with some time constraints attached to the allocations.

We're continuing to see significant pressures in operating costs and foregone revenues for 2021," Zegarac said.

But the remaining government funds should carry the city through this year, he said, noting staff aren't predicting a deficit.

Where we really see some headwinds developing is in 2022," Zegarac added, noting funding is expected to drop off.

The city has directed millions in funding toward public health's response to the pandemic as well as housing and social services amid a parallel homelessness crisis.

Municipal revenues have dropped, including roughly $25 million in foregone fare box dollars due to dipping ridership and a period of backdoor boarding to protect drivers from the virus, Zegarac noted.

As cases continue to surge during a troubling third wave of the pandemic, the city is focused on its vaccination program, an effort that's expected to cost about $34 million and fully covered by the province, he said.

Of the roughly $20 million to be placed in the COVID-19 reserve, Zegarac expects about $18 million will be drawn upon during this year.

The rest of the surplus is to be placed in various pots.

That includes $2 million for the tax stabilization reserve, $1.5 million for the climate change reserve, $15.1 million to cover development charge exemptions, and $5 million to bring funds available for the Red Hill inquiry up to $12 million.

Teviah Moro is a Hamilton-based reporter at The Spectator. Reach him via email: tmoro@thespec.com