Hamilton has $15M left over from last year, but that's not enough for a pandemic

The city had nearly $15 million left over from last year's operating budget, but Hamilton's head of finance says it's still not enough to cover the costs of COVID-19.

To cover COVID-19, the city says, it would have to raise taxes by 7 per cent

The city had a 2019 surplus of $14.7 million, and a water and wastewater budget surplus of $10 million. (Colin Cote-Paulette)

The city had nearly $15 million left over from last year's operating budget, but Hamilton's head of finance says it's still not enough to cover the costs of COVID-19.

Mike Zegarac told city council Wednesday that Hamilton ended 2019 with a $14,718,163 tax-supported budget surplus. Most of that will go into the city's tax stabilization reserve, which is meant to keep taxes low during unforeseen events.

But even with that money, Hamilton's tax stabilization reserve will still only have about $20.5 million in it, Zegarac said. If it put every penny of that toward Hamilton's pandemic response, it would still be short the estimated $22.8 million in COVID-19 costs expected to the end of May.

If Hamilton doesn't get money from the provincial and federal governments, Zegarac said, property taxpayers would face a one-time hike of seven per cent.

"It would be very punitive to residents if we were to fund our projected deficits through property taxes," Zegarac said during the meeting, which councillors joined via video link.

Mike Zegarac, general manager of finance and corporate services, says the city doesn't have enough in its major rainy-day reserve to cover COVID-19 costs. (Samantha Craggs/CBC)

Mayor Fred Eisenberger said he anticipates the federal and provincial governments will pitch in to help at some point. He's been lobbying through the Large Urban Mayors' Caucus of Ontario (LUMCO) and the Federation of Canadian Municipalities (FCM).

Coun. Brad Clark of Ward 9 (upper Stoney Creek) said that needs to bear fruit. Under the provincial municipal act, municipalities can't budget for a deficit. They can either increase taxes or drain reserves.

"We're in a no-win situation," Clark said.

The Ministry of Municipal Affairs and Housing said Wednesday that the province is working with municipalities "to understand their needs and the issues they face in meeting their budgeted expenses." It's working with the federal government on this too, the ministry said.

In an email, it pointed to an additional $200 million put into local social services relief funding, and changes to the Municipal Emergency Act that allow councils and committees to meet electronically. Otherwise, it said, municipalities should track their COVID-19 costs.

As for Hamilton's budget, both Hamilton Police Service and the Hamilton Public Library had money left over in 2019. For police, that equalled $1,425,221. The police service gets to keep that money, Zegarac said, and will put some into its own tax stabilization reserve, and spend the rest on equipment costs. 

The library had a surplus of $706,285.

A bigger variance, comparatively, was in the rate-supported budget, which people pay through their water bills. That had a surplus of $10,242,775 left over, which will go into water and wastewater reserves. 

The 2020 rate budget saw an increase of 4.11 per cent on the average resident's bill, or $29.70 more per year for a resident consuming 200 cubic metres of water.

About the Author

Samantha Craggs is a CBC News reporter based in Hamilton, Ont. She has a particular interest in politics and social justice stories, and tweets live from Hamilton city hall. Follow her on Twitter at @SamCraggsCBC, or email her at samantha.craggs@cbc.ca