Incoming Hamilton council faces potential 6.9 per cent budget hike

Lingering pandemic pressures, expiring upper-level government funding, escalating inflation, yawning infrastructure gaps.

That's the fiscal landscape - and a potential 6.9 per cent budget hike - Hamilton's incoming city politicians face in the afterglow of their election victories.

Mayor-elect Andrea Horwath will be among 10 new faces on the 16-seat council launching into budget talks this winter to tackle that challenge.

Horwath and councillors-elect, who take office next next week, took in a budget overview during the second day of orientation Wednesday at Dundurn Castle.

I think it's really important that we're getting this kind of preview to the budget process to help as the new councillors start to get their heads around information that's going to come fast and furious," Horwath said.

The former Ontario NDP leader offered those remarks after Mike Zegarac, general manager of finance, outlined the city's financial headwinds heading into budget talks, which wrap up in March.

Starting in 2020, COVID-19 had a very material impact" that continues to strain municipal coffers, Zegarac said.

Hundreds of millions in pandemic relief from senior levels of government led to initial surpluses, allowing council to park just short of $36 million in a special reserve.

But the pandemic pain continues - thinner transit fare-box revenue, recreation fees, parking dollars and slot proceeds - with an expected shortfall of $23 million while government funding dries up.

Looking forward to 2023, our challenge and Ontario municipalities' challenge: all that COVID funding is expiring in 2022," Zegarac said.

Save for some messaging" that the province will provide $13 million for public health, there's no other dedicated funding" programs tied to the pandemic.

Zegarac also pointed to supply-chain challenges, steep inflation and changes in provincial policy, including for development charges, as factors in the city's $1-billion budgetary puzzle.

Municipalities, meanwhile, can't run deficits (shortfalls must be tackled through taxes or reserves the following year) and rely on inelastic revenue tools relative to provincial and federal levers, he said.

In fact, when property assessments rise, municipalities are required to lower their tax rates to remain revenue neutral."

Ted McMeekin, who won Ward 15's (Flamborough) open seat, said the city must have a stronger voice via the Association of Municipalities of Ontario (AMO) to relay its concerns to the province.

And during budget talks, council must be honest, realistic," about the city's challenges. There's a convergence of things going on here."

Jeff Beattie, who unseated incumbent Maria Pearson in Ward 10 (lower Stoney Creek-Winona), said the city's budgetary constraints were on his mind in the lead-up to the Oct. 24 election.

I think I was very careful when I was speaking in the community to be relatively realistic."

But whether it's a 6.9 per cent or two per cent hike, Hamilton's infrastructure shortfall is still going to be an issue that we're going to have to grapple with," Beattie added.

A study recently found the city's core assets" (such as roads, bridges and water mains) have an annual funding gap of roughly $100 million, Zegarac noted.

In the past, councils have been able to whittle those initial prognostications" down, said Brad Clark, who was re-elected in Ward 9 (upper Stoney Creek). In 2022, the tax hike landed at 2.8 per cent.

Council will work very hard to find the ways and the means to find the savings with (the help of) staff."

In an interview, Zegarac suggested it's not all dire," noting council could dip into reserves to cushion an immediate hit to taxpayers.

While we're dealing with COVID and we're dealing with inflation, we have some ways of addressing those without creating hardship for property owners immediately."

Teviah Moro is a reporter at The Spectator. tmoro@thespec.com