The
Dominion Bond Rating Service has imposed a "negative
outlook" on Hamilton's credit rating. The
report was issued March 11 and states:
"The
rating action reflects a deterioration in the City's next
tax-supported debt outlook resulting from an increase
in the medium-term capital spending plan."
It
specifically cites costs of the Red Hill Valley
Expressway and the new waste management strategy
as the key driving factors in increasing debt
levels and warns that:
"Any
further increase to the tax-supported debt outlook would
likely warrant further rating action".
More
debt does seem very likely for three reasons:
The
peak debt levels projected in the City's budgets have
climbed by over $100 million in each of the last two
budgets. In the 2001 budget it was predicted to hit
$426 million (in 2005). In 2002 it was predicted to
hit $536 million (in 2007) and in the 2003 budget it
is predicted to hit $678 million (in 2007).
servicing new industrial lands in the Glanbrook business
park and around the airport will cost over $200 million
and most of this is not included in the current spending
projections.
As the Bond Rating report itself points out, the debt
projections do not include a $400 million shortfall
in funding for maintenance of existing infrastructure
over the next 10 years.
The
report also notes that Hamilton's "tax
arrears are considerably higher than other
large Canadian municipalities".
