City of Hamilton finance staff, taking a first crack at the 2017 budget, say that without some cost trimming the average taxpayer in Hamilton faces a $140 hike or an increase of over four percent. Staff are suggesting they will try to whittle that increase down to two percent for an increase of $70 on the average tax bill. The opening of the current round of budget discussions is one of the earliest in memory. The exercise also prompts a discussion of the growth of municipal spending in Hamilton and other Canadian cities.
At the time of amalgamation in 2001, Hamilton had a budget of $461 Million, and a staff complement of 5,800. Currently the budget is sitting at $828 Million, an increase of 80 percent –more than two and a half times the rate of inflation—and a staff compliment of nearly 7,500—an increase of about 30 percent. During that time Hamilton’s population has grown by only 6 percent. Allowing for inflation and population growth this leaves a spending gap of roughly $200 million. Some of that is attributable to provincial downloading, and some is attributable to agreed-upon program enhancements. But a lot of the increase is tied to salaries and benefit increases for the municipal workforce and to the growth of that workforce.
In a 2013 article in the National Post Laura Jones and Nora Gormanns of the Canadian Taxpayer Federation wrote, “wages and benefits make up more than half of municipal budgets. The growth in municipal employment over the past decade (25%) is outpacing the growth in population (12%) by a wide margin. Furthermore, municipal employees are paid far more generously than their counterparts in the private sector. Take two equivalent jobs, and the one in the municipal public sector will be paid almost 36% more in wages and benefits than the private sector equivalent.” Using that article as a benchmark, the growth of Hamilton’s municipal workforce is slightly ahead of the national average, (30 to 25 percent) while our population growth has been about half the rest of Canada (6 percent compared to 12 percent).
Last year the Association of Municipalities of Ontario (AMO) produced a paper predicting property taxes will need to increase by 4.51% per year for the next ten years just to meet current service levels and standards.. And this wouldn’t include money for our aging infrastructure. Throwing in enough money to fix that problem would result in a total tax increase of more than eight percent a year for ten years. That would amount to a doubling of the average homeowner’s current tax bill. In the same paper AMO said the initial fiscal problems caused by downloading were actually easing because the Liberals had been taking back some of the downloaded programs from the Harris era, which means the growth in spending at the municipal level would have even been worse had it not been for the policy change.
Against that backdrop there appears to be a growing movement to rein in municipal spending.Toronto Mayor John Tory has challenged that municipality’s bureaucracy to come up with an across-the-board 2.6% decrease in departmental budgets. “This is one of most important elements of their job, is to find ways with scarce public resources to do more, or to do the same for less, and that is all we’re asking here,” said Tory. “What we’re doing is asking people to do what every family does every year, what every small business does every year, what every big business does, what every non-profit organization does and what every government should do.” Tory has the backing of his council by a 2-1 margin.
In the UK the Cameron Government tackled one of the most sacrosanct areas of municipal spending—police budgets. The past five years saw spending cuts of more than 18% with the loss of more than 17,000 police officers and a programme of changes including the introduction of police and crime commissioners. That is not likely to change under the new Prime Minister Theresa May who, as Home Secretary oversaw the police cuts and warned, “We must redouble our efforts, force a more urgent pace, and deliver a more radical and more sustained period of police reform than we saw even in the last parliament…Because with protected funding comes an even greater responsibility to spend every penny of taxpayers’ money wisely, and to drive better value at every step.” By contrast Hamilton’s budget documents project a police budget increase of more than three percent. The high cost of energy in Ontario is expected to add another $3.7 Million in costs.
Written by: John Best