'Tough decisions' ahead says Hamilton mayor as city considers double-digit tax hike

A tough budget season looms in Hamilton as council and staff grapple with the financial impacts of inflation, provincial legislation and crises such as homelessness. 

At the moment, finance general manager Mike Zegarac estimates the city is looking at a 14.2 per cent tax hike. The average household would see a $678 increase on their property tax bill in 2024, he told the general issues committee this week. 

"What municipalities as a whole are facing are a number of increasing, complex challenges," he said at the meeting on Wednesday.

"We are facing new financial realities that are in part tied to the geopolitical factors we have no control over. They're tied to inflation that we have no control over. They're tied to supply chain challenges we have no control over." 

Last year council passed a 5.8 per cent increase — the largest in recent memory. 

This year Inflation has continued to drive up city costs related to rent subsidies provided to housing providers, waste and recycling contracts, its Presto card agreement with Metrolinx, and employee wages and benefits, said Zegarac.

Hamilton police have also forecasted a budget increase of 4.5 per cent or $8.7 million, he said.

And the Ford government has changed how much municipalities can charge developers for some types of projects. Historically, Hamilton has relied on these tens of millions of dollars to help pay for its social housing, Zegarac said.

With the legislative changes, the city will bring in about $21 million less in 2024, which translates to about two per cent of the tax bill increase, he said. 

2024 budget draft will be done later this year

Council also approved several initiatives this year that will require funding next year. They include a subsidy for student transit fares, climate change adaptations, 911 service upgrades and the opioid action plan. Council has also approved over $36 million to tackle the affordable housing crisis and homelessness through the encampment protocol, additional shelter spots and tenant support program, among others. 

Mayor Andrea Horwath called for more financial assistance from the provincial and federal government. 

"We have lots of tough decisions to make and we have to always be cognizant of the impacts on our residents as well as the need to provide services that folks deserve," Horwath told the committee.

"As other levels of government are walking away from their responsibilities, we are stepping into the breach because we don't want our city to fall apart." 

City staff are looking at dipping into reserves, borrowing money to pay for some capital projects, phasing in programs and reviewing departments for redundancies, Zegarac said. 

"At what point are we going to consider service cuts, reductions and deferrals of critical capital?" Coun. John-Paul Danko asked him. 

Zegarac said staff are preparing a draft budget to go to council in late-December, which will reflect different options.