City wrestles with $15 million deficit

News Oct 13, 2009 Ancaster News

Hamilton politicians are staring at a projected $15 million deficit, which translates into a possible 6 per cent average tax increase in 2010.The deficit is caused by three main areas, a higher social services caseload, the drop in the recyclable commodities market, and residents and businesses using less water during an unusually wet summer, said Corporate Services general manager Robert Rossini.Mr. Rossini added that Hamilton joined with other municipalities across the globe in enduring an economic slowdown that was the most severe since the Great Depression.“We are not immune,” he said. “Hopefully we can make (the deficit) up by the year end.”Budget projections are notoriously “conservative”, a fact councillors pointed out this week. Mr. Rossini agreed, saying in the past city financial staff have projected doom and gloom budget scenarios, but by the end of the year the problems seem to vanish or are at least mitigated.Projected budget deficits over the last few years have ranged from 6 per cent to 12 per cent. Yet, councillors have managed to bring down the average tax increase to the 3 to 4 per cent range. Councillors have already established a 2 per cent average tax increase ceiling for the 2010 budget.A few mitigation efforts that will been implemented to try and get the deficit down by the end of the year include establishing a hiring freeze on all non-essential staff vacancies, tighter controls on the city’s discretionary funding, and dipping into the city’s reserves, even though those reserves are dangerously low.Just like other municipalities, Hamilton has seen its social services caseload jump because of the economic downturn, at an extra cost of about $4.3 million to provide the basic needs, including shelter, food and child benefits to its residents. Waste management is expecting a $3.2 million shortfall because of a decline in recyclable prices, again caused by the recession. Other departments with projected shortfalls include risk management at cost of $1.7 million, a $4 million deficit in debt financing, and a $1 million deficit in transit because of the 4 per cent reduction in ridership. The deficit will be offset, said Gerry Davis, public works general manager, by the fuel savings caused by the drop in gas prices.Mr. Davis also confirmed city staff is looking at implementing what is being called a “stormwater fee” on landowners who have asphalt on their property. It was an idea talked about last year by Jim Harnum, senior director of water and wastewater. City staff has been debating the merits of the fee, and how to apply it. Mr. Rossini said it could be phased-in, possibly starting next year.Meanwhile, there will be a projected $7.6 million rate deficit in the water and wastewater rate budget because residents and institutions, especially U.S. Steel, have not been using water. U.S. Steel was closed for a portion of the year. City staff will also determine the “actual cost” of its social services downloading monies that the province should be providing Hamilton. City financial officials incorporated a $16.5 million provincial funding allocation into the 2010 budget for social services, which is about what the province has been giving the city each year in special funding to offset its rising social service costs. But due to the increasing number of people on social service programs, the funding provided by the province should be higher, possibly in the $20 million range  If the province does not provide the funding, it would mean an additional 1.1 per cent tax increase to taxpayers.

City wrestles with $15 million deficit

News Oct 13, 2009 Ancaster News

Hamilton politicians are staring at a projected $15 million deficit, which translates into a possible 6 per cent average tax increase in 2010.The deficit is caused by three main areas, a higher social services caseload, the drop in the recyclable commodities market, and residents and businesses using less water during an unusually wet summer, said Corporate Services general manager Robert Rossini.Mr. Rossini added that Hamilton joined with other municipalities across the globe in enduring an economic slowdown that was the most severe since the Great Depression.“We are not immune,” he said. “Hopefully we can make (the deficit) up by the year end.”Budget projections are notoriously “conservative”, a fact councillors pointed out this week. Mr. Rossini agreed, saying in the past city financial staff have projected doom and gloom budget scenarios, but by the end of the year the problems seem to vanish or are at least mitigated.Projected budget deficits over the last few years have ranged from 6 per cent to 12 per cent. Yet, councillors have managed to bring down the average tax increase to the 3 to 4 per cent range. Councillors have already established a 2 per cent average tax increase ceiling for the 2010 budget.A few mitigation efforts that will been implemented to try and get the deficit down by the end of the year include establishing a hiring freeze on all non-essential staff vacancies, tighter controls on the city’s discretionary funding, and dipping into the city’s reserves, even though those reserves are dangerously low.Just like other municipalities, Hamilton has seen its social services caseload jump because of the economic downturn, at an extra cost of about $4.3 million to provide the basic needs, including shelter, food and child benefits to its residents. Waste management is expecting a $3.2 million shortfall because of a decline in recyclable prices, again caused by the recession. Other departments with projected shortfalls include risk management at cost of $1.7 million, a $4 million deficit in debt financing, and a $1 million deficit in transit because of the 4 per cent reduction in ridership. The deficit will be offset, said Gerry Davis, public works general manager, by the fuel savings caused by the drop in gas prices.Mr. Davis also confirmed city staff is looking at implementing what is being called a “stormwater fee” on landowners who have asphalt on their property. It was an idea talked about last year by Jim Harnum, senior director of water and wastewater. City staff has been debating the merits of the fee, and how to apply it. Mr. Rossini said it could be phased-in, possibly starting next year.Meanwhile, there will be a projected $7.6 million rate deficit in the water and wastewater rate budget because residents and institutions, especially U.S. Steel, have not been using water. U.S. Steel was closed for a portion of the year. City staff will also determine the “actual cost” of its social services downloading monies that the province should be providing Hamilton. City financial officials incorporated a $16.5 million provincial funding allocation into the 2010 budget for social services, which is about what the province has been giving the city each year in special funding to offset its rising social service costs. But due to the increasing number of people on social service programs, the funding provided by the province should be higher, possibly in the $20 million range  If the province does not provide the funding, it would mean an additional 1.1 per cent tax increase to taxpayers.

City wrestles with $15 million deficit

News Oct 13, 2009 Ancaster News

Hamilton politicians are staring at a projected $15 million deficit, which translates into a possible 6 per cent average tax increase in 2010.The deficit is caused by three main areas, a higher social services caseload, the drop in the recyclable commodities market, and residents and businesses using less water during an unusually wet summer, said Corporate Services general manager Robert Rossini.Mr. Rossini added that Hamilton joined with other municipalities across the globe in enduring an economic slowdown that was the most severe since the Great Depression.“We are not immune,” he said. “Hopefully we can make (the deficit) up by the year end.”Budget projections are notoriously “conservative”, a fact councillors pointed out this week. Mr. Rossini agreed, saying in the past city financial staff have projected doom and gloom budget scenarios, but by the end of the year the problems seem to vanish or are at least mitigated.Projected budget deficits over the last few years have ranged from 6 per cent to 12 per cent. Yet, councillors have managed to bring down the average tax increase to the 3 to 4 per cent range. Councillors have already established a 2 per cent average tax increase ceiling for the 2010 budget.A few mitigation efforts that will been implemented to try and get the deficit down by the end of the year include establishing a hiring freeze on all non-essential staff vacancies, tighter controls on the city’s discretionary funding, and dipping into the city’s reserves, even though those reserves are dangerously low.Just like other municipalities, Hamilton has seen its social services caseload jump because of the economic downturn, at an extra cost of about $4.3 million to provide the basic needs, including shelter, food and child benefits to its residents. Waste management is expecting a $3.2 million shortfall because of a decline in recyclable prices, again caused by the recession. Other departments with projected shortfalls include risk management at cost of $1.7 million, a $4 million deficit in debt financing, and a $1 million deficit in transit because of the 4 per cent reduction in ridership. The deficit will be offset, said Gerry Davis, public works general manager, by the fuel savings caused by the drop in gas prices.Mr. Davis also confirmed city staff is looking at implementing what is being called a “stormwater fee” on landowners who have asphalt on their property. It was an idea talked about last year by Jim Harnum, senior director of water and wastewater. City staff has been debating the merits of the fee, and how to apply it. Mr. Rossini said it could be phased-in, possibly starting next year.Meanwhile, there will be a projected $7.6 million rate deficit in the water and wastewater rate budget because residents and institutions, especially U.S. Steel, have not been using water. U.S. Steel was closed for a portion of the year. City staff will also determine the “actual cost” of its social services downloading monies that the province should be providing Hamilton. City financial officials incorporated a $16.5 million provincial funding allocation into the 2010 budget for social services, which is about what the province has been giving the city each year in special funding to offset its rising social service costs. But due to the increasing number of people on social service programs, the funding provided by the province should be higher, possibly in the $20 million range  If the province does not provide the funding, it would mean an additional 1.1 per cent tax increase to taxpayers.