Fighting the COVID-19 pandemic will leave the city with a $23M deficit, report says

The COVID-19 pandemic will put the City of Hamilton about $23 million in the hole, a new report says, a deficit that includes a loss of transit fares and $78,000 in increased costs for more personal protective equipment.

The report coming to Hamilton city council Wednesday says even with money from Ottawa and the province, the pandemic will mean a net hit this year of $22,865,000 to local taxpayers.

"The city's operations have changed considerably with facility closures, program cancellations and modification of services provided," says the report, which finance head Mike Zegarac submitted. Councillors will discuss it during an online meeting at 9:30 a.m.

The report makes "a significant number of assumptions" around costs and lost revenues until the end of May, and the city is still hoping for more grants that bridge the gap.

But overall, "the COVID-19 pandemic is causing global anxiety, affecting human behaviour and impacting the world's economic condition," the report says. "In response, the city's operations have changed considerably."

Provincial rules say the city can't run a deficit, the report says.

That means any costs that aren't covered by grants from the provincial and federal governments will have to be covered in the 2021 operating budget. 

Where the money is going

Here are some of the biggest hits:

• The city is spending $203,000 on overtime for its paramedic service and $216,000 for fire, which is 50 per cent more than it spent from March to May of last year. Those departments also need $248,000 more for medical and operating supplies.
• Public Health is spending $3.8 million more in staffing costs on the pandemic response, and $78,000 more in personal protective equipment. The city expects the provincial or federal governments will cover this, but neither have announced it yet.
• HSR stopped collecting fares on March 19 so passengers could board the bus via the rear doors, increasing the space between drivers and riders. It also said seniors didn't have to renew passes, and didn't sell April transit passes. That cost $7.3 million in transit fare revenue. The city is also spending $391,000 more to clean its buses.
• The racetrack slots at Flamboro Downs have closed, which has cost the city $1 million in lost revenue. The Ontario Lottery and Gaming Corporation sends quarterly cuts of the slot revenue to the city.
• The city is losing $1.6 million because it's stopped charging for parking at most of its surface parking lots. The report also says there are fewer cars parking there in general now.
• The city has closed recreation programs and facilities, which means about $3.3 million in lost user fees. That includes a loss of $807,000 at city-owned golf courses.
• Provincial offences court has adjourned until the end of May, which means $2.6 million in lost Provincial Offences Act revenue.

The city has also waived penalties and interest for 60 days for those who can't pay the property tax instalment due on April 30. That means a loss of as much as $1 million, the report says. It's "extremely difficult" to know how many people will take advantage of that.

"Cash flow may be temporarily impacted," it says. "The city has sufficient cash flow to provide for this period; however, if due dates are further extended, additional measures may have to be taken."

Hamilton city council isn't the only one grappling with budget overruns. Brant County council met this afternoon and discuss a possible $1.2 million deficit based on "conservative assumptions."