By Kevin Werner, News Staff
Hamilton received some good financial news, despite its looming debt problem that could spike its humming economic engine.
Standard and Poor’s reaffirmed its AA stable credit rating for the city, citing its predicable government, strong liquidity, and diverse economy.
But the city’s still struggling to somehow pay for a $2 billion infrastructure deficit, with a population base that is not growing as fast as the rest of the province, and has limited revenue potential.
Hamilton’s debt for this year is about $245 million, but in 2014 it’s projected to balloon to $809 million, and by 2015, its debt is projected to top just over $1 billion. By 2017 when it’s at $985 million, the city’s debt will exceed 60 per cent of the city’s operating revenue.
“We have a challenge on our capital side,” said Ward 8 councillor Terry Whitehead. “There are limitations. We will have to keep an eye on the debt load.”
Councillors blamed both the provincial and federal governments for failing to provideHamiltonwith the necessary money to replace its aging infrastructure.
“We are not getting the appropriate funding,” said Whitehead.
Politicians agreed a few years ago to add 0.5 per cent to the levy in order to raise the funding to fix basic infrastructure needs, including sidewalks and roads.
Ward 5 councillor Chad Collins said even though politicians have passed tax increases over the last three years that are near their zero per cent target – and are expected to do it again for 2014 – it’s because Hamiltonians remain one of the most taxed people in the province.
“We have a high tax level compared to other municipalities,” said Collins. “It’s one of the reasons why we are trying to get as close to zero as possible. We are waiting for higher levels of government to make investments.”
Compounding the city’s financial crunch is its total reserve funds are projected to drop from $845 million this year to $702 million in 2014.
Ward 4 councillor Sam Merulla, a constant critic of senior levels of government, repeatedly hammered that the city’s budget is composed of 20 per cent of mandated programs from higher levels of government that local taxpayers are forced to pay. He said it was the formerHamiltonpoliticians who created the city’s infrastructure deficit.
“Their good old days have led to the bad old days,” said Merulla. “We inherited this deficit.”
He pointed out the $2 billion cost of building the Toronto subway would solve the city’s financial problems.
“If that doesn’t speak volumes of the neglect of Hamilton,” said Merulla. “I’m literary beside myself.”
Hamilton’s economic future, stated Standard and Poor, remains buoyant with a diversified workforce including in the healthcare, financial and food processing industries in the wake of the U.S. Steel fallout; and its unemployment rate is at 6.5 per cent, lower than the provincial average of 7.8 per cent.
Still its population growth is about 3.1 per cent, lower than the provincial average of 5.7 per cent.
“We do have a lack of flexibility in certain areas,” saidStoney Creekcouncillor Brad Clark, who has raised the city’s debt problems in the past.
Hamilton’s credit rating has been AA stable since 2008. From 2005 to 2007 the agency rated the city AA positive, and from 1989 to 1994 the rating was AAA.