Hamilton expected to have year-end deficit this year

News Apr 10, 2020 by Kevin Werner Stoney Creek News

Hamilton is projected to lose up to $1 million in revenue and investments after deferring the April 30 tax instalment for 60 days until June 30.

It's just a glance at what will be grim financial numbers for the city at the end of 2020, as well as for all Canadian municipalities, as they deal with rising costs and evaporating income during the novel coronavirus pandemic.

For instance Hamilton continues to operate its transit system free for passengers — albeit at a reduced service — along with providing essential emergency services and waste collection, while at the same time it pays to open up shelters for the homeless, including FirstOntario Centre, and allocating emergency relief funds and resources to a few health-care facilities during the health emergency.

“We are bleeding revenue (and) expenses are going through the roof,” said Mayor Fred Eisenberger.

Corporate Services General Manager Mike Zegarac said according to the majority of Canadian municipalities, they are all projecting year-end deficits for 2020.

“Municipalities are dependent on property taxes,” he said. “They make up the majority of revenues. That’s why no municipality is suggesting forgiveness.”

Critics have been calling on municipalities to waive tax payments, especially to homeowners who have lost their jobs, and vulnerable residents who have seen a cut to their incomes.

Hamilton councillors, at their first virtual meeting April 8, waived any late penalties and interest that may have accumulated during the 60-day tax deferment.

Zegarac said estimates are that the city will lose anywhere from $500,000 to $1 million from penalties, interest, administrative fees and investment income that will be forgiven during the 60-day period.

By provincial law, municipalities are not permitted to budget for a deficit. They are allowed to carry capital debt, but it can’t be higher than 25 per cent of their annual own-source revenue such as property taxes, user fees and investment income.

Eisenberger said Canadian municipalities have been discussing their financial distress with federal authorities, including with Deputy Prime Minister Chrystia Freeland, to explain the desperate need for financial relief.

“We are making that case our revenues are declining, our expenses are increasing, and we have only one source (of revenue) to go to.”

Eisenberger said senior levels of government are aware of municipalities' plight, but at the moment their priorities are to help residents and businesses to stay afloat and to somehow stimulate the economy.

“There is a great deal of uncertainty and there is the fear that comes with it,” said Ward 4 Coun. Sam Merulla. “It’s a problem that should be solved at the provincial and federal levels.”

Ontario did defer the education tax portion that municipalities pay the province annually to later this year. Hamilton pays the province $200 million annually in education taxes in four $50 million instalments.

Mountain Coun. Terry Whitehead said since the city needs to curtail its spending, it’s time to examine possible staff layoffs.

“What about what the city is doing with regards to the work not being done and yet employees are being paid,” he said. “What are we doing to control our costs so that these costs are not being incurred again? If you are not working, should you be paid?”

Eisenberger said the city still has a responsibility to keep the local economic going, especially after the city experienced in March its worst job loss in decades because of the virus.

“We have to have a fine balance to this issue,” he said. “It’s an issue we will have to deal with.”

Hamilton already has laid off its seasonal winter workers, including snow removal, and arena staff, which is done every year.

Eisenberger said later that the federal government’s announcement to pay 100 per cent of the wages for youth allowing businesses and governments to hire summer staff is something the city can use. It is expected the program will create up to 70,000 jobs for young people between ages 15 and 30. Eisenberger said the city will examine the criteria to determine if the city qualifies for the subsidy.

“Beyond that we will have a hard look at the balance between continuing to support the economy over attempting everything possible to make our finances whole.”

 

Hamilton could lose up to $1 million after deferring taxes for 60 days

News Apr 10, 2020 by Kevin Werner Stoney Creek News

Hamilton is projected to lose up to $1 million in revenue and investments after deferring the April 30 tax instalment for 60 days until June 30.

It's just a glance at what will be grim financial numbers for the city at the end of 2020, as well as for all Canadian municipalities, as they deal with rising costs and evaporating income during the novel coronavirus pandemic.

For instance Hamilton continues to operate its transit system free for passengers — albeit at a reduced service — along with providing essential emergency services and waste collection, while at the same time it pays to open up shelters for the homeless, including FirstOntario Centre, and allocating emergency relief funds and resources to a few health-care facilities during the health emergency.

“We are bleeding revenue (and) expenses are going through the roof,” said Mayor Fred Eisenberger.

Related Content

Corporate Services General Manager Mike Zegarac said according to the majority of Canadian municipalities, they are all projecting year-end deficits for 2020.

“Municipalities are dependent on property taxes,” he said. “They make up the majority of revenues. That’s why no municipality is suggesting forgiveness.”

Critics have been calling on municipalities to waive tax payments, especially to homeowners who have lost their jobs, and vulnerable residents who have seen a cut to their incomes.

Hamilton councillors, at their first virtual meeting April 8, waived any late penalties and interest that may have accumulated during the 60-day tax deferment.

Zegarac said estimates are that the city will lose anywhere from $500,000 to $1 million from penalties, interest, administrative fees and investment income that will be forgiven during the 60-day period.

By provincial law, municipalities are not permitted to budget for a deficit. They are allowed to carry capital debt, but it can’t be higher than 25 per cent of their annual own-source revenue such as property taxes, user fees and investment income.

Eisenberger said Canadian municipalities have been discussing their financial distress with federal authorities, including with Deputy Prime Minister Chrystia Freeland, to explain the desperate need for financial relief.

“We are making that case our revenues are declining, our expenses are increasing, and we have only one source (of revenue) to go to.”

Eisenberger said senior levels of government are aware of municipalities' plight, but at the moment their priorities are to help residents and businesses to stay afloat and to somehow stimulate the economy.

“There is a great deal of uncertainty and there is the fear that comes with it,” said Ward 4 Coun. Sam Merulla. “It’s a problem that should be solved at the provincial and federal levels.”

Ontario did defer the education tax portion that municipalities pay the province annually to later this year. Hamilton pays the province $200 million annually in education taxes in four $50 million instalments.

Mountain Coun. Terry Whitehead said since the city needs to curtail its spending, it’s time to examine possible staff layoffs.

“What about what the city is doing with regards to the work not being done and yet employees are being paid,” he said. “What are we doing to control our costs so that these costs are not being incurred again? If you are not working, should you be paid?”

Eisenberger said the city still has a responsibility to keep the local economic going, especially after the city experienced in March its worst job loss in decades because of the virus.

“We have to have a fine balance to this issue,” he said. “It’s an issue we will have to deal with.”

Hamilton already has laid off its seasonal winter workers, including snow removal, and arena staff, which is done every year.

Eisenberger said later that the federal government’s announcement to pay 100 per cent of the wages for youth allowing businesses and governments to hire summer staff is something the city can use. It is expected the program will create up to 70,000 jobs for young people between ages 15 and 30. Eisenberger said the city will examine the criteria to determine if the city qualifies for the subsidy.

“Beyond that we will have a hard look at the balance between continuing to support the economy over attempting everything possible to make our finances whole.”

 

Hamilton could lose up to $1 million after deferring taxes for 60 days

News Apr 10, 2020 by Kevin Werner Stoney Creek News

Hamilton is projected to lose up to $1 million in revenue and investments after deferring the April 30 tax instalment for 60 days until June 30.

It's just a glance at what will be grim financial numbers for the city at the end of 2020, as well as for all Canadian municipalities, as they deal with rising costs and evaporating income during the novel coronavirus pandemic.

For instance Hamilton continues to operate its transit system free for passengers — albeit at a reduced service — along with providing essential emergency services and waste collection, while at the same time it pays to open up shelters for the homeless, including FirstOntario Centre, and allocating emergency relief funds and resources to a few health-care facilities during the health emergency.

“We are bleeding revenue (and) expenses are going through the roof,” said Mayor Fred Eisenberger.

Related Content

Corporate Services General Manager Mike Zegarac said according to the majority of Canadian municipalities, they are all projecting year-end deficits for 2020.

“Municipalities are dependent on property taxes,” he said. “They make up the majority of revenues. That’s why no municipality is suggesting forgiveness.”

Critics have been calling on municipalities to waive tax payments, especially to homeowners who have lost their jobs, and vulnerable residents who have seen a cut to their incomes.

Hamilton councillors, at their first virtual meeting April 8, waived any late penalties and interest that may have accumulated during the 60-day tax deferment.

Zegarac said estimates are that the city will lose anywhere from $500,000 to $1 million from penalties, interest, administrative fees and investment income that will be forgiven during the 60-day period.

By provincial law, municipalities are not permitted to budget for a deficit. They are allowed to carry capital debt, but it can’t be higher than 25 per cent of their annual own-source revenue such as property taxes, user fees and investment income.

Eisenberger said Canadian municipalities have been discussing their financial distress with federal authorities, including with Deputy Prime Minister Chrystia Freeland, to explain the desperate need for financial relief.

“We are making that case our revenues are declining, our expenses are increasing, and we have only one source (of revenue) to go to.”

Eisenberger said senior levels of government are aware of municipalities' plight, but at the moment their priorities are to help residents and businesses to stay afloat and to somehow stimulate the economy.

“There is a great deal of uncertainty and there is the fear that comes with it,” said Ward 4 Coun. Sam Merulla. “It’s a problem that should be solved at the provincial and federal levels.”

Ontario did defer the education tax portion that municipalities pay the province annually to later this year. Hamilton pays the province $200 million annually in education taxes in four $50 million instalments.

Mountain Coun. Terry Whitehead said since the city needs to curtail its spending, it’s time to examine possible staff layoffs.

“What about what the city is doing with regards to the work not being done and yet employees are being paid,” he said. “What are we doing to control our costs so that these costs are not being incurred again? If you are not working, should you be paid?”

Eisenberger said the city still has a responsibility to keep the local economic going, especially after the city experienced in March its worst job loss in decades because of the virus.

“We have to have a fine balance to this issue,” he said. “It’s an issue we will have to deal with.”

Hamilton already has laid off its seasonal winter workers, including snow removal, and arena staff, which is done every year.

Eisenberger said later that the federal government’s announcement to pay 100 per cent of the wages for youth allowing businesses and governments to hire summer staff is something the city can use. It is expected the program will create up to 70,000 jobs for young people between ages 15 and 30. Eisenberger said the city will examine the criteria to determine if the city qualifies for the subsidy.

“Beyond that we will have a hard look at the balance between continuing to support the economy over attempting everything possible to make our finances whole.”