For the fifth year out of six, the city of Hamilton has recorded its second-largest budget surplus.
City financial staff told politicians last week they were projecting a total $11.4 surplus for the year, combining its tax and rate supported services.
It is the second highest surplus the city has had since 2007. Last year the surplus reached $15 million, the highest over the last five years. In 2010, the surplus was $5.2 million, while in 2007 it was $5.4 million and $7.4 million in 2008. The city recorded a budget deficit of $3.3 million in 2009.
The city saved about $8.5 million in capital financing, and another $5 million from the public works budget, mainly because of lower winter control, and waste processing costs. The city also had declining Ontario Works caseloads, delays in recreation openings, and savings from social housing subsidy payments, for a total of about $2.8 million. Another $1.7 million was saved by delaying the hiring of people for vacant positions. Some of the savings were offset by $12 million in tax write-offs the city was forced to do this year. It was also a poor year for business and trade license revenues, and there was a parking revenue shortfall.
The 2012 surplus will be shifted to various department reserve funds, city finance staff said. The city has seen its reserve funds nearly depleted after councillors dipped into them one time too often, particularly from the Tax Stabilization Reserve or the Unallocated Capital Reserve.
Before he departed for the city of Toronto, former corporate services general manager Robert Rossini told councillors last December that politicians’ decisions to use reserve funds to pay for tax-supported programs has hit financial bottom this year.
Council had agreed to increase user fees this year in order to replenish the planning department fee stabilization reserve fund. Staff used the remaining $2.1 million to cover higher staff salary costs.
“Using the reserves is not sustainable,” said Rossini.
Politicians approved last year taking $8.1 million from the Tax Stabilization Reserve, which is now near zero, to pay for such programs as $400,000 to cover a licensing revenue shortfall; $125,000 for an on-street meter parking revenue gap; Glanbrook’s animal services contract at $75,000; $1.8 million in Ontario Works discretionary benefits, and $2 million in provincial funding cuts.
Councillors are scheduled to further discuss this year’s budget at the March 21, government issues committee meeting. The preliminary average tax increase remains at 2.2 per cent or about $75 extra for a homeowner.
Politicians still have to decide whether or not to approve $3.5 million in items for this year’s budget. If councillors want to get to their stated target of zero per cent, they would have to either cut or find revenues totally $17 million.
Politicians are also expected to discuss the on-going investigation of the public workers that were fired earlier this year after they would found neglecting their duties. The internal review is looking at the workers’ managers to see how they were performing when the workers were on their jobs. After politicians met behind closed doors last week,
