All the work city councilors did in the early months of the year to pare down this year’s tax increase has gone for nothing in the face of the COVID outbreak. City Treasurer Mike Zegarac estimates that between revenue that has vanished as a result of the shutdown and increased costs to meet the pandemic, Hamilton will be short $22.9 Million by the end of May and that is only a preliminary estimate. The number could go much higher if the lock down extends beyond May. Zegarac told council that the City has reserved of almost $900 Million but much of that is mandated for specific purposes. He did indicate that the city could lay its hands on $30 Million quickly if necessary and the city also has a line of credit with the banks. Under provincial legislation a city can carry forward a deficit but must wipe it out next year, unless there is a rescue package from senior governments. That would mean added pressure dealing with making up $23 Million while simultaneously dealing with inflation and the normal cost pressures council faces every year. Staff are monitoring the cash flow situation to make sure there is enough cash coming in the fund current operations. There is concern that the city has sufficient liquidity to meet its obligations with another tax installment due at the end of this month. Staff will be monitoring income to see how the COVID crisis has affected taxpayers ability to pay their installments on time. Meanwhile Mississauga Mayor Bonnie Crombie held a media briefing today where she indicated that Mississauga’s shortfall could reach $100 Million depending on the length of the crisis. Large cities across Canada are working on a coordinated bailout request from Ottawa
Hamilton’s $23 Million shortfall is made up of the following items:
The current forecast to end of May estimates an unfavourable variance of $7.3 Millionin transit fare revenues due to COVID-19 related health and safety measures.The analysis assumes a continued collection of $1.6 M from University and College bus passes as there is currently no mechanism to return the funds to students.
Lower recreation user fee revenues of $3.3 M are due to closure of facilities and cancellation of programs. These include, but are not limited to, lost revenues of $751 K from the Quad Pad, $807 K from Golf Courses, $790 K from Recreation Facilities and $550 K from Arenas. Continuation of facility closures beyond May will result in further revenue losses.
Provincial Offences Act
POA lost revenues are currently estimated at $2.6 M. The Provincial OffencesCourt has adjourned all court attendance matters until the end of May and it is reasonable to anticipate that the judiciary may choose to extend this date further. Further lengthy extensions could result in the withdrawal or dismissal of charges given an accused’s right to a trial within a reasonable time pursuant to the Charter of Rights and Freedoms.
Lower parking fee revenues of $1.6 M are anticipated as a result of fee cancellations and less vehicles using paid parking spaces. Ontario Lottery and Gaming Slots The closure of casinos and racetrack slots by the Province of Ontario is expected to result in $1.0 M of lost revenues.
Other foregone and deferred revenues include an estimated $570 K in tax penalties and interest that has been waived to assist taxpayers facing financial hardship, $950 K in supplementary taxes, $371 K in building permits, $300 K in development applications, $800 K in red light camera fines and $1.4 M in various other user fees and licences.
Total gross additional costs are anticipated to be $24.6 M as Public Health, Ontario Works and Housing Services are experiencing significant increases in response to the COVID-19 pandemic related to additional staffing requirements and additional payments for vulnerable individuals, which are largely offset by funding from the Provincial Government. Incremental costs from the COVID-19 pandemic response are also affecting many other City services, including additional cleaning and disinfectant costs. The net budget impact of additional expenditures is currently estimated at $6.6 Million
Public Health Services
An additional $3.8 M is anticipated for staffing costs associated with the COVID19 pandemic response. Personal protective equipment (PPE) costs are also estimated at an increase of $78K to the current budget. While it is anticipated that senior levels of government will provide funding for these additional expenditures, allocation methods or amounts to the City have yet to be provided.
Additional $14.2 M in Subsidy Claim payments to OW clients based on Provincial announcements has been accounted for. This increase will be directly offset by $14.2M in grants and subsidies from the Province.
Anticipated an additional $2.6 M in costs for Residential Care Facilities and shelter programs, which is offset by $2.6 M in additional funding announced for the CHPI program. There is also an incremental increase of $1.2 M in Agencies and Support payments for the Reaching Homes program announced by the Federal government on April 2, 2020. A one-time payment of $226 K to Social Housing Providers for additional cleaning costs in the month of April has also been incorporated in the analysis.
The LTC program anticipates an additional $89 K in costs for cleaning and medical supplies at Macassa and Wentworth lodge. Additional funding of $150 K for the two facilities from the MOHLTC is expected to mostly offset these costs and the $74 K in lost revenue due to cancellation of the Adult Day Program and not admitting new residents at the facilities.
Paramedic Services and Fire Services
A total of $203 K in additional employee related overtime expenses for Paramedic Services and $216 K for Fire Services is expected, a 50% increase to historical levels for the period of March, April and May. In addition, $248 K in expenditures for medical and operating supplies is assumed.
Cleaning and Disinfectant
Estimates include $391 K for cleaning and fogging for Transit Services, including a special chemical applied to bus interiors to repel the virus. In addition, $117 K is estimated for cleaning requirements at the Emergency Operations Centre, Wentworth Contact Centre and City Hall. It is also expected that $123 K will be spent on signage for park closures and PPE for essential workers.
The Information Technology Division had an additional $241 K of salary, benefits and contract costs related to the initial requirements in enabling work from home options for essential staff. Costs for laptops, additional hardware and software licenses are estimated at $188 K.
Avoided costs, currently estimated at $4.0 M, are comprised of current staff vacancies, anticipated decreases in insurance claims as a result of facility closures, and a reduction in materials and supplies resulting from service disruption.
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