The city is taking about $258,000 from its reserves so it can offer health benefits to low-income Hamiltonians until the end of the year.

Staff will spend $258,138 more in social services money as a stop-gap measure so it can continue to offer discretionary benefits from July to December. The program includes funerals, emergency dental work, low-cost transit passes and eyeglasses for residents on social assistance.

It's a necessary move to keep offering the service, which the province cut drastically last year, staff said. After that, the city is unsure what it will do.

"I'm very worried about what's going to happen," said Tom Cooper, director of the Hamilton Roundtable for Poverty Reduction, who appeared before the emergency and community services committee Monday.

"We're going to be in the same position come December that we were last year."

The province capped the discretionary benefits program to $10 per social assistance case last year, resulting in a shortfall for the city of $1,816,727 in 2012 and $3,756,517 in 2013. Previously, there was no cap for health-related benefits and a cap of $8.75 per case per month for non-health related benefits.

'A broken system,' Merulla says

The province also cut Community Start Up and Maintenance Benefits, which would have resulted in a $3.7-million shortfall, although the province has offered one-time transitional funding to cover that.

The change is one more example of what Coun. Sam Merulla calls "a broken system" of tax disparity that favours the province.

Merulla plans to introduce a motion at the next committee meeting calling on the province to follow up on a 1990s "who does what" investigation about which level of government offers what service.

"If the province is going to fail miserably to protect the most vulnerable in our community, and if the province is going to deem funeral costs a discretionary benefit, then we as a city can't endorse such a sad state of affairs," he said.

The Hamilton Roundtable for Poverty Reduction has formed a subcommittee to examine options for the current discretionary benefits model. It also continues to lobby the province, Cooper said.

"We're going to fight and demand that the provincial government steps up and fulfills its responsibilities to ensure that the most vulnerable members of our community are protected," he said.