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March 22, 2004
EXPRESSWAY CREATES BUDGET CRISIS
City budget decisions start tomorrow morning, and the Red Hill Creek Expressway is at the top of a 300-page agenda facing city councillors. The massive agenda was released this morning, less than 24 hours before the meeting which starts Tuesday at 9:30 am.
The first item on the agenda is a nine-part recommendation that would approve the proposed $185 million capital budget for 2004. The seventh part reads: " That the 2004 Tax Supported Capital Budget and Financing Plan for the Expressway in the amount $32,909,000 including additional debenture financing in the amount of $17,661,000 as per Appendix 1-14 of Book 1 to Report FCS04011, be approved."
The accompanying 8 page report focuses on the "capital affordability deficit" facing the City. While staff reports are usually understated, this one makes no secret of the financial problem being created by the expressway, in combination with the unavoidable and expensive Solid Waste Management Master Plan (SWMMP). Staff are predicting a "dramatic 50% decrease in capital funding for regular programs (roads, facilities,.e.t.c.) which would take effect in 2004 due to increased debt attributable to the Red Hill Valley Project and the SWMMP."
Here are a few quotes from the report:
"In the City's capital planning forecast, the Red Hill Valley and SWMMP capital projects use up a significant portion of capital funding from the proposed 2004-2007 capital levy leaving a minimal amount of capital funding for infrastructure rehabilitation."
".the amount of capital projects (excluding Red Hill Valley Projects and the Solid Waste Management Master Plan) funded directly from the capital levy decreases significantly from 2005 to 2008. Without significant subsidy funding for infrastructure from the senior levels of government, the City of Hamilton would have to severely constrict it's infrastructure rehabilitation program."
"Due to 2 major City capital initiatives, which are now past the planning stage and into major funding commitments and implementation (Red Hill Valley and Solid Waste Management Master Plan), the rising debt load is starting to constrict available capital dollars for other City projects."
Staff bluntly warn that even if council accepts DiIanni's proposed budget, it can do no better than briefly put off the looming financial crisis - " it essentially has delayed by one year, the capital affordability problems" (boldface in the original).
In the next two years alone (2005 and 2006), the capital program is $90 million short. Consequently, the report argues that "the City desperately requires capital subsidies from senior levels of government", or it will have to use up the entire $100 million hydro Future Fund (monies borrowed three years ago using the assets of Hamilton Hydro as collateral).
Even with the $100 million, the City's capital budget will remain on life support. In the first place, the budget will still not cover basic infrastructure maintenance and replacement. As the report notes, "in such areas as road, bridges and facilities, the City should be spending significantly more than it currently does."
Secondly, the budget forecast (including the $100 million that hasn't been found yet) only allows $7 million per year for any new projects. For example, servicing the North Glanbrook Business Park that is supposed to be made accessible by the expressway, will cost $45-50 million, or more than the next six years worth of discretionary capital spending.
The full staff report is on the City website at
http://www.hamilton.ca/clerk/agendas-minutes-reports/committee-of-the-whole/2004/Mar23%20and%2026/FCS04049%202004%20CAPITAL%20BUDGET%20-%20REVISED%20OPTION%20D.pdf.
Report prepared by CATCH (Citizens at City Hall). To receive all of their updates (several per week) contact them at CATCH@cogeco.ca or visit their website at www.environmenthamilton.org/CATCH.
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