Hamilton saw a $25 million surplus for 2019, but it won’t be enough to cover pandemic costs

News May 01, 2020 by Kevin Werner Stoney Creek News

Hamilton ended 2019 on a positive financial note, earning a $25 million surplus in both its tax supported and rate budgets.

However, that may not be enough to offset what Mayor Fred Eisenberger is projecting to be a $30 million deficit by the end of May and about double that later in the year.

City financial staff earlier identified the city’s deficit at $22.9 million. An update will be provided to councillors in May.

The city ended the year with a $14.7 million tax supported surplus that included savings from the library, police, housing and economic development departments along with council’s unspent ward budgets, and savings in contracts and consulting.

The surplus funding has been allocated to various department reserve funds, including the city’s tax stabilization reserve. The slot revenue surplus of $456,000 from Flamboro Downs will be transferred to the Flamborough Capital reserve fund.

Currently, the tax stabilization reserve fund, which is designed to keep taxes low during rainy-day events, has $23 million.

Corporate Finance general manager Mike Zegarac said the fund will potentially be an essential component to cover any coronavirus pandemic costs the city is racking up now.

Meanwhile, the city earned a $10.2 million rate supported surplus from water and wastewater fees. The funding will be transferred to water and stormwater programs.

Mayor Fred Eisenberger said municipalities across the country have been lobbying the federal government about providing aid to cities and towns that are all forecasting deficits this year.

Hamilton is losing revenue through transit fares, deferring April 20 tax instalments and waiving interest and penalties. It's also losing out on parking and recreation fees.

But it is also incurring higher expenses while providing essential services.

According to Ontario’s municipal act, municipalities are prohibited from budgeting an operating deficit. Any year-end deficit has to be transferred to the next year.

Eisenberger has said to cover the extra costs the city would have to either raise taxes, or significantly cut services.

“This is an issue we will have to deal with,” he said.

Mountain Coun. Terry Whitehead said revenues are expected to be lower, but services are projected to stay the same.

“There will be some real hard decisions that will have to be made,” he said.

Zegarac told councillors that “it would be very punitive to residents if we were to fund our projected deficits through property taxes.”

He said that it would take about a seven-per-cent residential tax increase to cover the pandemic deficit. This year’s average tax hike was 2.9 per cent.

Municipalities across the country have already submitted upwards of a $15 billion aid package to the federal government to help bail out towns and cities.

“The message we are getting from the (federal) minister of finance (Bob Morneau) and the Deputy Prime Minister (Chrystia Freeland) is we hear you; we understand. We are just dealing with the immediate issues now,” said Eisenberger.

Both the federal and provincial governments have already expressed an interest in assisting municipalities and they are studying the situation.

 

Hamilton saw a $25 million surplus for 2019, but it won't be enough to cover pandemic costs

News May 01, 2020 by Kevin Werner Stoney Creek News

Hamilton ended 2019 on a positive financial note, earning a $25 million surplus in both its tax supported and rate budgets.

However, that may not be enough to offset what Mayor Fred Eisenberger is projecting to be a $30 million deficit by the end of May and about double that later in the year.

City financial staff earlier identified the city’s deficit at $22.9 million. An update will be provided to councillors in May.

The city ended the year with a $14.7 million tax supported surplus that included savings from the library, police, housing and economic development departments along with council’s unspent ward budgets, and savings in contracts and consulting.

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The surplus funding has been allocated to various department reserve funds, including the city’s tax stabilization reserve. The slot revenue surplus of $456,000 from Flamboro Downs will be transferred to the Flamborough Capital reserve fund.

Currently, the tax stabilization reserve fund, which is designed to keep taxes low during rainy-day events, has $23 million.

Corporate Finance general manager Mike Zegarac said the fund will potentially be an essential component to cover any coronavirus pandemic costs the city is racking up now.

Meanwhile, the city earned a $10.2 million rate supported surplus from water and wastewater fees. The funding will be transferred to water and stormwater programs.

Mayor Fred Eisenberger said municipalities across the country have been lobbying the federal government about providing aid to cities and towns that are all forecasting deficits this year.

Hamilton is losing revenue through transit fares, deferring April 20 tax instalments and waiving interest and penalties. It's also losing out on parking and recreation fees.

But it is also incurring higher expenses while providing essential services.

According to Ontario’s municipal act, municipalities are prohibited from budgeting an operating deficit. Any year-end deficit has to be transferred to the next year.

Eisenberger has said to cover the extra costs the city would have to either raise taxes, or significantly cut services.

“This is an issue we will have to deal with,” he said.

Mountain Coun. Terry Whitehead said revenues are expected to be lower, but services are projected to stay the same.

“There will be some real hard decisions that will have to be made,” he said.

Zegarac told councillors that “it would be very punitive to residents if we were to fund our projected deficits through property taxes.”

He said that it would take about a seven-per-cent residential tax increase to cover the pandemic deficit. This year’s average tax hike was 2.9 per cent.

Municipalities across the country have already submitted upwards of a $15 billion aid package to the federal government to help bail out towns and cities.

“The message we are getting from the (federal) minister of finance (Bob Morneau) and the Deputy Prime Minister (Chrystia Freeland) is we hear you; we understand. We are just dealing with the immediate issues now,” said Eisenberger.

Both the federal and provincial governments have already expressed an interest in assisting municipalities and they are studying the situation.

 

Hamilton saw a $25 million surplus for 2019, but it won't be enough to cover pandemic costs

News May 01, 2020 by Kevin Werner Stoney Creek News

Hamilton ended 2019 on a positive financial note, earning a $25 million surplus in both its tax supported and rate budgets.

However, that may not be enough to offset what Mayor Fred Eisenberger is projecting to be a $30 million deficit by the end of May and about double that later in the year.

City financial staff earlier identified the city’s deficit at $22.9 million. An update will be provided to councillors in May.

The city ended the year with a $14.7 million tax supported surplus that included savings from the library, police, housing and economic development departments along with council’s unspent ward budgets, and savings in contracts and consulting.

Related Content

The surplus funding has been allocated to various department reserve funds, including the city’s tax stabilization reserve. The slot revenue surplus of $456,000 from Flamboro Downs will be transferred to the Flamborough Capital reserve fund.

Currently, the tax stabilization reserve fund, which is designed to keep taxes low during rainy-day events, has $23 million.

Corporate Finance general manager Mike Zegarac said the fund will potentially be an essential component to cover any coronavirus pandemic costs the city is racking up now.

Meanwhile, the city earned a $10.2 million rate supported surplus from water and wastewater fees. The funding will be transferred to water and stormwater programs.

Mayor Fred Eisenberger said municipalities across the country have been lobbying the federal government about providing aid to cities and towns that are all forecasting deficits this year.

Hamilton is losing revenue through transit fares, deferring April 20 tax instalments and waiving interest and penalties. It's also losing out on parking and recreation fees.

But it is also incurring higher expenses while providing essential services.

According to Ontario’s municipal act, municipalities are prohibited from budgeting an operating deficit. Any year-end deficit has to be transferred to the next year.

Eisenberger has said to cover the extra costs the city would have to either raise taxes, or significantly cut services.

“This is an issue we will have to deal with,” he said.

Mountain Coun. Terry Whitehead said revenues are expected to be lower, but services are projected to stay the same.

“There will be some real hard decisions that will have to be made,” he said.

Zegarac told councillors that “it would be very punitive to residents if we were to fund our projected deficits through property taxes.”

He said that it would take about a seven-per-cent residential tax increase to cover the pandemic deficit. This year’s average tax hike was 2.9 per cent.

Municipalities across the country have already submitted upwards of a $15 billion aid package to the federal government to help bail out towns and cities.

“The message we are getting from the (federal) minister of finance (Bob Morneau) and the Deputy Prime Minister (Chrystia Freeland) is we hear you; we understand. We are just dealing with the immediate issues now,” said Eisenberger.

Both the federal and provincial governments have already expressed an interest in assisting municipalities and they are studying the situation.