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Sobering look at city of Hamilton Finances

There was much praise of city finance boss Mike Zegarac for the comprehensive report he prepared in the effects of COVID19 on the city treasury, but the substance of the report contained some pretty grim news. The treasurer outlined two scenarios: the first assuming a three-month lockdown with a six month recovery period—the second, a nine month lockdown with a 12-month recovery.

The first scenario would cost taxpayers almost $62 Million, the second scenario would set the city back by $122 Million. As council was receiving this bad news a release went out from the GTHA mayors and chairs asking the provincial and federal government to come to an agreement as quickly as possible on an emergency bailout for cities.

The drop in transit revenue and the expected slow recovery of transit usage accounts for the biggest drain on city revenues

The treasurer took council through a number of scenarios to mitigate the situation, none, other than a senior government bailout, particularly palatable. There is approximately $29 million  in capital projects that could be delayed, and council will be going through that list in the coming weeks. There was no open discussion of staff or service cuts, but presumably there will have to be at some point. Under provincial law cities are not allowed to run operating deficits, with one exception—if a deficit is unavoidable it must be paid off in full in the coming year. In the case of Hamilton that would mean a one-time tax hike of either 6.9 percent or 13.6 percent depending on the length of the lockdown and recovery.

Mayor Fred Eisenberger says he has been in discussions along with other big-city mayors with both the federal and provincial finance ministers. He says the two levels of government have been hearing from cities on an almost daily basis and its expected there will be some kind of bailout for cities, but the question is how much? At this point staff have been told to work on scenarios to mitigate the losses, as council and taxpayers await news from Ottawa—the only level of government with the ability to print money.

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