City braces for 'no' from province over funding
October 28, 2009
Emma Reilly
The Hamilton Spectator
http://www.thespec.com/News/Local/article/661717
The city is considering service cuts, user fee hikes and property tax increases to ease a potential $31.5- million budget shortfall next year.
City staff originally predicted a $15-million deficit, mostly due to a projected increase in welfare claims, shrinking recycling revenue and a drop in water consumption.
However, that figure assumed the city would receive $16.5 million from the province to help cover the cost of social services.
In light of the province's $25-billion deficit, officials now say they're worried Hamilton won't receive a helping hand from the province -- a move that would send city's deficit soaring to $31.5 million.
Mayor Fred Eisenberger told council members at a budget update yesterday that they should "prepare themselves" for the possibility of being cut out of provincial funding.
"We're not getting warm and fuzzy feelings about the possibility of that this year," he said. "I think we need to be creative and prepared for the possibility that $16.5 million won't come."
City council voted this year to keep property tax hikes to 2 per cent or less, a goal that the city's manager of finance Rob Rossini called "almost impossible" without provincial help.
If the city receives provincial funding, property taxes will have to climb by 4.4 per cent to balance the budget and maintain current service levels. Without the province's $16.5 million, homeowners would face a 8.4 per cent increase.
The city is looking at raising transit fares, recreation program fees and parking rates to help ease the shortfall.
Services and programs could also be cut, though Eisenberger said it's too early to say which areas would be affected.
Council has clearly outlined several areas that won't face cuts, including emergency service response programs, programs for low-income residents, street median plantings and the Mum Show.
Councillor Sam Merulla called for a salary freeze for all non-union staff, including council. The move would save $900,000.
The city is also considering revisiting four-day work weeks. Staff will report back to council about this option in early December.
The city expects to hear from the province in early 2010.
Cash crunch
What's causing the projected shortfall?
* $9.2 million increase in social assistance costs
* $3 million loss in recycling revenue
* $1.3 million loss in HSR fare revenue
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