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May
2002 Newsletter
2002
Budget Shows Expressway Unaffordable
Councillors
Dave Braden, Russ Powers and Margaret McCarthy weren't exaggerating
when they warned in early May that the Red Hill Expressway
may bankrupt the City. In this year's budget documents the
staff bluntly warn that "insufficient funding is being
provided for facility maintenance, rehabilitation and renewal,
and; capital funding levels are far below infrastructure
needs in the area of roads, storm sewers and waste management."
This is also true for the sanitary sewers and water pipes
which are covered under a separate budget paid for by fees
rather than taxes.
Staff
also state: "The City is currently in a budgetary 'Catch
22' situation with regards to the allocation of capital
funds. If it were to fund existing City infrastructure to
recommended annual levels, there would be no available capital
for new projects" (like the expressway).
With
regards to the expressway specifically, staff note that
"Given the City's extensive infrastructure requirements,
issuing an additional $79.1 million net in tax supported
external debt for one project is cause for concern for our
credit rating agencies." Staff also state: "The
2002-2011 capital program has a growing gap between the
requirements of the existing infrastructure and the allocations
of funds for the same. Maintenance, rehabilitation and replacement
of existing infrastructure has been deferred as funding
has been directed to special projects such as the Expressway
and capital projects previously approved and included in
prior year's financing plans but never fully funded."
The
last part of the last quote is quite incredible. It admits
that the Council has been busy spending money on its pet
projects for years without actually borrowing money to pay
for them. Consequently, last year, the City was forced to
borrow $55 million and earlier this month, Council approved
an additional $82 million in borrowing. Our public debt
is growing by leaps and bounds. Last year it stood at $246
million. By 2006 it will be $529 million or more than $1000
for every man, woman and child in the new Hamilton. Repaying
this debt is already costing the average taxpayer nearly
$350 a year.
This
huge debt burden is overwhelming the City's budget decision-making.
Altogether, the City collects about $460 million in taxes
each year. However, Council controls less than half of this.
The rest goes to provincially-mandated programs or outside
boards such as the police.
Of
the remainder, 20% is spent just paying off debt ($50 million
last year). Given the huge borrowing underway, and the prospect
of the expressway debt, future councils will have no choice
but to further cut programs and maintenance work.
In
the next article, you
will find a description of some of the cuts being recommended
this year. Since Council is committed to reducing business
taxes by another $17 million over the next two years, many
more cuts are inevitable. In addition, spending for the
expressway is only $5.3 million this year — for more
consultants and to finish the Linc-403 interchange. Next
year this amount is supposed to rise to $40 million.
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