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March 12, 2004
DiIANNI BUDGET PLAN UNVEILED
Mayor DiIanni unveiled his long-awaited budget strategy this morning. It includes service cuts, user fee increases, sharply higher taxes, and a demand that the province provide a $19.5 million bail-out to Hamilton.
The mayor tried to focus attention on the "responsibility" of the province to give the city more money, rather than on the Council's refusal to re-consider its budget priorities of cutting business taxes and building the Red Hill Creek Expressway. Indeed, DiIanni didn't even mention the expressway project which is already receiving about $30 million a year in provincial subsidies.
DiIanni is recommending a 7.4% tax increase or an average of $154 per home. However, this is being presented as 5.9% overall increase because it is assumed that there will be no increase in the education portion of the property tax. More than a quarter of the increase is to pay for a $9 million cut in business taxes. This is the fourth consecutive year of major business tax cuts, mostly for the industrial sector, which will now total $40 million since 2001.
Tax increases on homes will be up to 4% higher in Ancaster, Flamborough, and some other parts of the City including west Hamilton because of changes in property value assessments and phase-ins from previous assessment changes.
DiIanni justified the tax increase on the feedback he received from his budget consultation. He said that two-thirds of the 483 people who filled out budget questionnaires (out of 4700 distributed) said they would support a tax increase of between 3 and 9%. Although he admitted this "was not a scientific survey", he further stated that 75% of the respondents supported a 5% increase in user fees.
The budget includes a substantial amount of financial juggling reminiscent of the fudged budgets adopted in each of the last three years. This includes the following alleged "savings":
- $3 million from delaying the issuing of debt
- $1 million reduction (50%) in the contingency fund for capital projects
- $0.5 million reduction in previously agreed on contributions to reserves
- $2.4 million transfer of costs to the separate water and sewer budget
City Treasurer Joe Rinaldo publicly expressed discomfort with some of these maneuvres, but justified them as necessary because of the City's financial crisis.
The draft budget also proposes draining the Hamilton Future Fund by $15 million in each of the next four years. The Future Fund (perhaps to be renamed the Past Fund) was created by the City selling Hamilton Hydro to itself (to the 100% City-owned Hamilton Utilities Corporation) and then borrowing against its assets. Hydro customers are paying back this debt on each monthly bill.
Major cuts and fee increases in the proposed budget include the following:
- $200,000 cut in library funding
- $550,000 increase in ice rental rates (up $20 per hour)
- n$20,000 increase in room rental fees (up 10%)
- $1.4 million - abandonment of tree planting plans
- $250,000 - rejection of urban forest health program
- $6.7 million - rejection of regular tree trimming program
Members of City Council generally supported DiIanni's demand of money from the province, but some were doubtful it will succeed. The McGuinty government has repeatedly stated that it has a budget crisis of its own. Giving money to Hamilton would result in demands for similar treatment from every other municipality in the province. Councillor Murray Ferguson bluntly asked the mayor: "Do you have a Plan B?", and found out he doesn't, while Councillor Chad Collins asked what would happen if the province says no, as it has up until now.
Councillor Brian McHattie asked staff to prepare a risk assessment on the budget proposals, citing the dangers of proceeding with the expressway when there is no money to service the lands it is supposed to make accessible. He noted the health and financial risks of not planting trees, and of failing to improve transit service, and asked for a report on whether the business tax cuts have actually attracted increased business assessment.
Councillor Dave Braden again pointed to the deficits not mentioned in the budget, such as the $40 million a year depletion of reserves, and the average $58 million a year increase in debt. "Our position is changing to the worse $100 million a year," he warned. "Anybody who's been in business, knows those numbers have to be dealt with". Councillor Andrea Horwath followed Braden's comments with a request to staff to provide a report on changes to the debt to reserve ratio, a key determinant of the City's credit rating.
The mayor hopes to finalize the budget at a special council meeting on March 31. Prior to that, three more budget meetings are scheduled for March 22, 23 and 26.
Report by Citizens at City Hall (CATCH).
To receive regular updates from CATCH, email CATCH@cogeco.ca or visit their website at www.environmenthamilton.org/CATCH.
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