The city of Hamilton has a good credit rating, but it faces an uncertain future thanks to a $2-billion deficit to fix its roads, bridges and other infrastructure.
Standard and Poor’s gives the city a credit rating of AA, which means its credit is strong. A major downside, the American financial services company points out, is an infrastructure deficit that constrains its budget and endangers its ability to handle financial challenges in the future.
Hamilton also has a fairly high tax levy relative to the household income compared to other Canadian cities, says the report on the city's 2012 finances.
The city’s audit, finance and administration committee will discuss the credit rating on Tuesday.
Other highlights from the Standard and Poor’s report:
- The city had $419 million in tax-supported debt at the end of 2012. That’s equal to 32 per cent of its operating revenue. This is moderate compared to other cities.
- With the infrastructure deficit, the city’s debt burden could reach 60 per cent of its operating revenue by 2017.
- Hamilton’s strengths: strong liquidity, an economy that continues to diversify and a “well-balanced local government framework.”
- The city’s population increased by 3.1 per cent since the 2006 census, which is below the provincial average of 5.7 per cent.
- The unemployment rate in 2012 was 6.5 per cent, lower than the provincial rate of 7.8 per cent.
Other cities with an AA credit rating include Kingston, Toronto, Niagara, Windsor and Barrie.
London, Halton, Waterloo, Durham and others had an AAA credit rating. Brantford, Guelph and Ottawa had an AA+ rating.
Hamilton had an AA credit rating from 1999 to 2005 and 2008 to 2012. From 2005 to 2007, it had an AA+ rating. The former region had a stronger AAA rating from 1989 to 1994.
The city committee meeting starts at 9:30 a.m. on Tuesday. Reporter Samantha Craggs will tweet live at @SamCraggsCBC.