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Hamilton’s budget bubble

The most surprising aspect to Hamilton council’s 2014 budget deliberations was how stress-free discussions were.

There was no stand-off with the police services, nor was there (much) whining about the provincial government not paying its fair share. A recommendation to enhance Hamilton’s woefully inadequate transit service on the mountain prompted some contention, but it was a minor skirmish within the entire budget discussions.

After all was said and done, councillors unanimously agreed on the 1.5 per cent average tax increase for residents, one of the lowest in the post-amalgamation era.

With all that seemingly sunny news, why does it feel like Hamilton is heading into a hurricane?

While the 1.5 per cent average tax increase does seem impressive on paper, in reality residents in Glanbrook, Flamborough, Ancaster and Dundas will see higher increases due to the final year of the area-rating phase-in. Again downtown Hamiltonians escape with less than a one per cent tax hike, if that, while some households broke even. But the disparity in who pays is only the tip of the financial iceberg for the city.

Some councillors pointed out that Hamilton’s financial base is slipping away. For over a decade homeowners — particularly in the suburban areas — have been paying the freight as the industrial and commercial taxbase has continued to erode. Hamilton residents, despite the low tax increases over the years, still pay one of the highest property tax bills in the province.

Adding to its revenue problem, politicians have been steadily depleting the city’s reserves. Financial staff has been warning since last year about Hamilton’s rising debt level and evaporation of its reserves throughout all departments.

Something has to give.

And the financial strain on Hamilton’s balance sheet is only expected to get more complicated.

Over the last four years there has been labour peace. Last time out the city’s unions recognized that Hamilton was in a tough financial spot and took small pay increases. But as their contracts expire they’ll likely be looking for raises.

City officials and politicians still trumpet that Hamilton has turned the financial corner. Downtown is being rejuvenated, cranes are part of the city’s skyline, there is a shortage of shovel-ready land and the city has made the lists of the top municipalities in which to invest and live. As Mayor Bob Bratina said recently, Hamilton’s median household income has jumped to about $80,000, a sign that the city is on the right path to a sustainable community.

But the future holds many potholes for ambitious councillors. To keep the momentum flowing, Hamilton needs an economic plan that doesn’t include borrowing on its future.

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