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February
10, 2004
DiIANNI'S BUDGET "CONSULTATION"
Mayor
DiIanni is conducting his own “public consultation”
on the $65 million budget shortfall. It includes meetings
where he speaks, as well as a budget questionnaire designed
by his office to elicit the kinds of answers he wants to
hear. The glossy 12-page questionnaire asks people to choose
between tax increases and cuts to services. But there is
no place in the questionnaire where you could suggest either:
- stopping
the Red Hill Creek Expressway
-
stopping the further reduction of business taxes
These
two items are the “budget priorities” of Mayor
DiIanni and are “untouchables”. What would happen
if the City Council decided to “touch” these two
items?
Over
the past three years, the Council has reduced taxes on commercial
property by 15% and on industrial property by 30%. The reduction
now totals $30.6 million a year. That is, the City Council
starts its budget deliberations this year with $30.6 million
LESS in revenues than it did in 2001. The budget proposes
a further $7 million reduction in business taxes in 2004.
The
2004 proposed budget for the expressway is $33 million.
The province will provide $15 million of this, but has stated
publicly that it is willing to re-allocate this money to
other City priorities IF City Council asks them to do so.
So
if the Council simply decided to stop the expressway and
NOT further reduce business taxes, the budget deficit would
drop by $40 million – from $65 million to $25 million.
The
federal government has just decided to relieve City’s
from paying the GST. This will save Hamilton about $9 million
a year. That gets the budget shortfall down to $16 million
or less than a 3% tax increase with no cuts in services.
DiIanni
is loudly complaining that the provincial government is
being unfair to Hamilton by not providing more money. DiIanni
specifically says Hamilton should be getting an extra $25
million a year to cover social services. What he conveniently
forgets is that the province has committed $125 million
over the next four years to the Red Hill Creek Expressway
project. That’s more than $30 million a year that the
province is giving to Hamilton, but not providing to any
other municipality in Ontario.
What
other steps could Hamilton take to get its financial house
in order?
During
the budget process City staff have repeatedly stated that
new house building costs the City. This is because the development
charges in Hamilton are absurdly low at barely $7000 per
home. The average in the surrounding communities is over
$16,000. Since there are about 2000 new homes built every
year in Hamilton, the City is losing $18 million a year
because it has such low development fees.
Unlike
most other cities, Hamilton exempts all industrial and many
commercial developments from development charges. Ending
these exemptions and would add at least $4 million a year
to City revenues.
A
very large slice of the City budget is taken off the top
to pay off debt. This year’s debt charges are $54.4
million. That’s equal to the combined costs for waste
management, the HSR and DARTS. Paying off the Linc and valley
expressways accounts for $6 million of that figure and will
rise to $10.5 million by 2008. Cancellation of the valley
expressway will make future budgets much easier.
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