Hamilton

Hamilton says it can't handle $23M deficit from the COVID-19 pandemic on its own

"We've always been taught in life to save for a rainy day," says one councillor. "And boy, have we been poured upon."

'We've always been taught in life to save for a rainy day, and boy, have we been poured upon'

The city has closed parks, recreation programs and other services in light of the COVID-19 pandemic. It's also looking at a 2021 deficit of nearly $23 million. (Bobby Hristova/CBC)

The city needs help from the provincial and federal governments to cover a pandemic-related $23-million budget shortfall because there's no way it can do it on its own.

That was the consensus of councillors who met Wednesday via video conferencing.

Finance head Mike Zegarac said if COVID-19 pandemic measures last until the end of May, local taxpayers are looking at a $22,865,000 budget hit in 2021. Major shortfalls include a loss of transit revenue, parking revenue, and even red light camera fines.

Council voted to ask the provincial and federal governments for help paying.

"I don't want to give any signal we're going to figure this thing on our own," said Sam Merulla, Ward 4 (east end) councillor.

"Clearly, we're in depression numbers. We're not in recession numbers. So we need to keep in mind that the solution can only come from the provincial and federal government. It cannot come from the municipal tax base."

Zegarac says the city has enough cash on hand right now to stay afloat.

Beyond that, it will have to look for creative solutions, especially if more than 60 per cent of homeowners take up the city's offer to forgive interest payments for people are 60 days late with their April 30 tax instalments.

"My sense is we'll be developing forecasts for end of June, end of September, and end of December," Zegarac said. 

The provincial and federal governments have committed about $18 million so far to Hamilton's COVID-19 measures. That still leaves the city nearly $23 million in the hole, blowing up the 2020 operating budget that council carefully combed through and approved this spring.

Under provincial rules, the city can't run a deficit.

Big losses include:

  • $3.8 million more in staffing costs for Hamilton Public Health Services, and $78,000 more in personal protective equipment. The city expects the provincial or federal governments will cover this, but neither have announced it yet.
  • $7.3 million in lost transit fare revenue. HSR stopped collecting fares on March 19 so passengers could board the bus via the rear doors, increasing the space between drivers and riders. The city is also spending $391,000 more to clean its buses.
  • $1 million in lost revenue from the Ontario Lottery and Gaming Corporation because the racetrack slots at Flamboro Downs have temporarily closed.
  • $1.6 million in lost parking revenue. The city has stopped charging for parking at most of its surface parking lots, and there are also fewer cars parking in general.
  • $3.3 million in lost user fees from recreational programs. That includes a loss of $807,000 at city-owned golf courses.
  • $2.6 million in lost Provincial Offences Act revenue because the applicable court has closed.
  • $800,000 in lost red light camera fines because there are fewer vehicles on the road. 

The province has halted all non-essential construction projects, which includes most residential building. People can still buy building permits, and they're still doing that, said Jason Thorne, general manager of planning and economic development. But at some point, without being able to build, that would dry up.

Tom Jackson, Ward 6 (east Mountain) councillor, says he's glad the city made healthy contributions to its reserves over the last 10 years, since it will need them now.

"We've always been taught in life to save for a rainy day," he said. "And boy, have we been poured upon."

 

ABOUT THE AUTHOR

Samantha Craggs is a CBC News reporter based in Hamilton, Ont. She often tweets about Hamilton city hall. Follow her on Twitter at @SamCraggsCBC, or email her at samantha.craggs@cbc.ca

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