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September
2003
Newsletter
Hamilton
Heading for Bankruptcy?
Friends
of Red Hill has issued many warnings about the City's
financial crisis. In the last month we have been joined
by the City's auditors, the City Manager and a string of
top City bureaucrats, many of whom have decided to flee
the sinking ship. Even some pro-expressway councillors are
now quietly predicting we are on the way to bankruptcy.
In
the six months since the 2003 budget was adopted, the City
has run up an operating deficit of over $16 million. Since
such a deficit is illegal, reserves have been drained to
cover it. However, the deficit shows that the budget "cuts"
last March were a farce and simply an underhanded way to
put off massive tax increases until after the November elections.
A $16 million deficit is equivalent to an additional 4.5%
tax hike, more than double what was imposed on Hamilton's
taxpayers. City staff are already predicting an additional
$40 million shortfall in the 2004 budget.
In mid-August, the auditors reported the City took in $1
billion last year, but spent $1.1 billion. Reserves went
down $82 million, while unpaid taxes and other liabilities
increased by $58 million, for a total drop of $140 million
in taxpayers' equity. The auditors wrote: "The above
items are indicators that the city does not have the appropriate
oversight, discipline, rigour and planning in existence
with respect to financial matters." In response to
the audit report, the City Treasurer declared: "Our
financial position is deteriorating. There is no question
about that part of it." The report was so critical
that Councillor Murray Ferguson publicly admitted: "I
don't think we're qualified to be an audit committee. Most
of us don't understand financial statements." The other
three members of Council's audit committee are Bob Wade,
Larry DiIanni and Marvin Caplan.
A week later the City Manager revealed that tens of millions
of tax dollars are being spent without proper scrutiny by
Council. "It surprises me the magnitude of the purchases
that run through the system without council ... seeing them
come forward or understanding what the purchase was for,"
he said. "What I find vexatious is that this is quite
different than most other jurisdictions."
Earlier in the summer, the City Manager publicly acknowledged
that numerous senior City staff are leaving Hamilton to
take jobs elsewhere. "The word on the street is that
Hamilton is not a good place to work", he admitted.
Staff morale is at an all-time low as the City drifts into
financial chaos. The planning department has been particularly
hard hit by the defections because their role has been downgraded
in favour of the agenda of the economic development department.
The City Manager gloomily predictes that budget cutbacks
of 20% will likely be required in 2004 and that there will
be "no sacred cows". But Larry DiIanni, Bill Kelly
and other pro-expressway councillors aren't listening and
continue to claim that Hamilton can afford the expressway.
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