City Budgets

2021 Tax and Rate Budgets

2021 Municipal Budget

From plowing the snow in the winter to opening the public pools in the summer, to transit and infrastructure, fire and paramedic services you rely on every day - your taxes go towards running City services. And every day, as a City of Hamilton tax payer, you place your trust in our employees to provide you with high quality, efficient services and programs that matter most to you. We do this by managing the budget today and planning for tomorrow.

A municipal budget is a policy and planning document that outlines our City’s priorities. Balancing those priorities is a challenging undertaking. That’s because we need to identify what we need to do now to keep providing this high level of service to our residents and plan on what we need to do in the future. It’s also about what we can afford to do.

2021 Preliminary Budget Information

The Canadian economy is in the deepest recession since the 1930s due to COVID-19, peaking in April and slowly recovering throughout the summer with the gradual reopening of the economy.  Municipalities were hit particularly hard as they managed service continuity for essential services and infrastructure during the lockdown period.  While financial pressures for municipalities in 2020 were somewhat alleviated through the historic Safe Restart Agreement and Social Services Relief Fund, it is anticipated that health risks will continue to remain on an ongoing basis and economic activity is not expected to return to pre-COVID-19 levels until at least 2022.

The City will continue to face many financial pressures in 2021 including the loss of revenue from transit operations and recreation user fees, as well as, increased costs for Public Health and housing for the most vulnerable.  Based on current information, staff is projecting financing pressures related to COVID-19 in 2021 between $34.8 M and $59.2 M

The 2021 Tax Operating Budget outlook has been updated with the most current information available and the estimated municipal levy increase of $44.6 M, requires  a 4.0% municipal property tax increase, which translates to $146 for the average residential property assessed at $380,300.

2021 Tax Rate

The preliminary outlook for the 2021 Rate Operating Budget projects an operating expenditure increase for Hamilton Water Division of approximately $1.7 M or 2.0% over the 2020 Budget. The recommended rate increase for 2021 is 4.28% which is largely comprised of capital financing requirements.

2021 Tax Water rate

Budget 101 Q&A

A Municipal Budget is a plan for how dollars are used, invested or earned over a given time period. It is also a policy and planning document that outlines the City’s priorities. Decisions made as part of budget development help determine funding for the programs and services that maintain resident’s quality of life.

For every dollar the City spends:

  • 50% comes from property taxes
  • 22% comes from Grant & Subsidies
  • 12% comes for Rate Revenue (water, wastewater and stormwater)
  • 12% comes from User Fees
  • 4% comes from Reserves

There are three main components to the City’s annual budget:

  1. The Tax Supported Operating budget: The tax supported operating budget is a plan for the day-to-day operations at the City of Hamilton, including employee salaries, materials and supplies, contractual services and financing of capital projects.

    The tax supported operating budget is largely funded by property tax dollars and user fees, which include charges for recreation programs, transit, infractions, permits and licensing.
     
  2. The Tax Supported Capital budget: The tax supported capital budget is the long-term plan for the construction or purchase and financing of the City’s capital assets. Examples of capital assets include infrastructure, land, buildings, machinery and equipment.

    Forms of funding include grants, development charges, gas tax, reserves debt and contributions from the operating budget.
     
  3. Rate Supported Operating and Capital Budget: The rate supported operating budget is the annual plan for the day-to-day operations of the City’s services and financing of capital projects supported from water, wastewater and stormwater user rates.

    The Rate Supported Capital Budget is a long-term plan for the purchase or construction and financing of water, waste water and stormwater capital assets.

    Forms of funding include grants, development charges, debt, reserves and contributions from the operating budget.

Ontario legislation states that municipalities must have a balanced budget. Under legislation, municipalities cannot finance operations with debt.

Reserves and reserve funds are similar to a savings account where funds are set aside for future capital needs.

The City’s reserves can be broken down into two categories:

Non-Obligatory (Discretionary): Non-Obligatory reserves are based on Council direction and are used to finance future expenditures designated by Council. They are comprised of the tax supported and rate supported reserves and the Hamilton Future Fund.

Obligatory: Obligatory reserves are funds that are required by the province to be segregated for a specific purpose. They are comprised of development charge reserves, federal & provincial gas reserves, parkland dedication reserves and building permit reserves.

Federal gas tax reserves are available to support local infrastructure priorities in specific project categories.

Provincial gas tax reserves are used to fund public transit infrastructure and operations.

The City’s current credit rating from Standard and Poors Global Ratings in October 2020 is AA+ with stable outlook.  The rating agency expects that during the COVID-19 pandemic and recovery, the City of Hamilton’s creditworthiness is supported by higher levels of government and prudent financial management. Hamilton’s recovery is aided by our economic diversification.  Fiscal performance is expected to be resilient due to pandemic-related restrictions and mitigation measures.  S&P Global Ratings mention the City’s strong management, strong fiscal performance, low debt and high liquidity as key rating strengths supporting its ‘AA+’ rating. 

Governed by the Municipal Act, the City of Hamilton has the ability to invest surplus funds not immediately required for its purposes in Short & Long-Term Investments. For example, the City invests money in the reserves fund until it is required for future obligations.

The primary objectives for all City investment activities are to ensure the safety of principal, maintain adequate liquidity to meet the City’s cash needs, and to earn investment income.

Each year, Council determines what levels of funding for services should come from the various sources of revenue.

Budget meetings are held between October and April each year. Typically, the tax supported capital budget and rate budgets are presented first, followed by the tax supported operating budget later in the cycle.

Each Department presents their own tax operating budget and business plans.

During this process, Councillors have an opportunity to ask questions and seek clarification from staff. Public delegations appear before Council as well.

Meetings are also held to focus on budgets submitted from related boards, agencies and committees requiring Council approval. This includes Hamilton Police Services, Hamilton Public Library, various conservation authorities and volunteer sub-committees.

City council meetings are accessible to the public. Budget documents and presentations are available on the City’s website. During the year, the City submits reports to Council on variances in expenditures and revenues from budget.

Independent auditors will audit the annual financial statements prepared by management. Additionally, an annual financial information return (FIR) is submitted to the Ministry of Municipal Affairs. The FIR is a legislatively required data collection tool to collect financial and statistical information to compare across municipalities.

The City of Hamilton’s budgets work in conjunction with multi-year business planning. Staff closely monitor and report key metrics on visual dashboards, allowing Council to keep a pulse on performance through the Trust and Confidence Report. All of these pieces come together to support the City’s strategic plan.

Budgeting During a Pandemic Q&A

The City provides more than 70 services and more than 200 sub-services to the public and the 2021 budget is prepared on the basis of continuing to provide those services. The City budget is based on expected cost increases that include labour rates, inflation, utility costs and the costs of services and materials the City must purchase. While many services have experienced interruptions due to the pandemic, the City continues to ensure those services will be available to residents (facilities, equipment etc.) as the public health environment permits.

Closing facilities and postponing services did result in some staff positions not being hired and a temporary suspension of part-time and seasonal employee hours. However, any savings or avoided costs are offset by revenues the City did not collect. This is particularly true in the areas of museums and recreation.

The City of Hamilton delivers more than 70 services and more than 200 sub-services to the community. Almost every City service was impacted by the pandemic in some way. While many of the services had very little noticeable change for the people receiving them, the City was required to deliver many of them in different ways, often with staff working with enhanced health and safety guidelines or remotely.

Some examples of services that required changes/modification in delivery include (note, not an exhaustive list):

  • City Council, Council Relations and Legislative Services: Council and committee meetings moved to a virtual format.
  • Financial Management, IT, Legal Services, Communications: Services continued with most staff working remotely, and any necessary office visits were made under enhanced health and safety guidelines.
  • Roadway Maintenance: After a brief interruption in service in March 2020 resulting in the suspension of non-emergency road and sidewalk work, maintenance has continued under enhanced health and safety guidelines.
  • Transit: Offering essential trips only on a reduced schedule during most of the pandemic. Fare collection suspended and enhanced cleaning protocols in place.
  • Building Permits and Zoning By-law Review, Development Approvals: Public counter is closed in favour of an online process for permit applications and zoning requests. The Building Division issued 6,666 building permits in 2020, and 1,623 zoning and property reports.
  • Life Skills and Case Management: Moved from in-home visits and group workshops to virtual care using video conferencing. In March 2020 there were 30 referrals on the waitlist. With the implementation of video delivery, the waitlist for the program was eliminated in 2020.
  • Ontario Works: Service continued with modifications. Staff transitioned to a work-from-home format to ensure minimal disruption in service to clients.

Some examples of services that had to be closed or significantly modify their services include:

  • Recreation Facilities & Services: Through the pandemic, indoor recreation activities were cancelled as per Provincial restrictions. However, the City still offers a number of creative recreation options for residents, such as the Rec at Home program, Seniors without Walls, and other programs offering take home kits and activities for residents to access virtual, outdoor, and self-directed recreation.
  • Directly Operated Child Care (Red Hill Family Centre): Early on in the pandemic, the City’s Red Hill Family Centre was closed under provincial direction. It reopened in the summer based on provincial direction and implemented enhanced health and safety guidelines to operate safely.

The City anticipates $30 million in additional operating pressures in 2021. These pressures include increased costs for waste collection, ongoing affordable housing investments, changes in recycling revenues due to a reduction in commodity prices in Asian markets, and collective agreement obligations and capital financing costs. The increase also includes costs associated with agencies and boards.

Using reserves earmarked for capital projects to fund operational needs is not currently contemplated in budget planning. Reserves are targeted for special projects as well as for needed capital infrastructure needs (roads, water, sewer etc.) which continue despite the pandemic.

Using reserves to fund ongoing operating costs is not a sustainable form of operational spending.

By law, municipalities in Ontario are not permitted to run a deficit.

The City incurred $38 million in pandemic related costs in 2020, including investments personal protective equipment, hand sanitizer, cleaning supplies etc.

These costs are expected to continue in 2021 and are currently estimated to be $22 million. The City expects much of these costs to be covered by financial supports that have been provided by the federal/provincial governments.

For 2020, yes. In some cases, those supports extend to March 31, 2021 but the City is working with the senior levels of government to determine if those supports will continue throughout the year.

The City lost an estimated $55 million in revenue in 2020, including monies normally collected in transit, recreation, parking and provincial offences, OLG slot machines.

The City currently estimates lost revenues to total $39 million in 2021.

The closure of some facilities and the suspension of some services did result in some positions not being hired and the temporary suspension of part-time and seasonal employees’ schedules. Any savings or avoided costs are offset by lost revenues.

Part-time Recreation and Museum staff have been placed on Declared Emergency Leave. Essential services in Public Works (roads, water, sewer etc) continue to be provided by full-time staff.

We are not aware of any staff at the City that are being compensated for not performing work, though the nature of how work is performed has changed for some. Some staff have been asked to work from home, some have been redeployed, and some have had their duties modified.

Staff members on active duty who are immunocompromised or 70 years of age or older and cannot work from home received income protection.

Yes. A total of 1,334 employees were placed on Declared Emergency Leave in May and June 2020 with majority resuming their duties when restrictions eased. Many of these employees, 944, were again placed on Declared Emergency Leave. When employees are on emergency leave, they are not paid by the City but are eligible for federal support programs.

Employees on declared emergency leave are able to take an unpaid leave of absence but still have their employment protected.

There are a number of supports available to employees whose work was interrupted by the pandemic. These include:

  • Employment Insurance
  • Canada Recovery Benefit
  • Canada Recovery Sickness Benefit
  • Canada Recovery Caregiving Benefit
  • Infectious Disease Emergency Leave
  • Declared Emergency Leave

Yes, several hundred employees have been redeployed from their regular duties in various areas of the City to help with the pandemic response, and that continues. Employees have been redeployed from across the organization, including staff for example from the City Manager’s Office, Healthy & Safe Communities, Customer Service, Economic Development and Engineering.

In addition to those who have been redeployed, many other employees have also seen changes in the nature, number and scope of their duties due to COVID-19 and the pandemic response.

Yes, the City had to hire 576 new staff to assist with the pandemic response, primarily in the area of Public Health.

Yes, the City hired 320 students in 2020, including summer students, co-op students and high-school co-ops. The City hired 59.7 per cent fewer students in 2020 compared with 2019.

The City has provided a number of supports to staff who are dealing with various COVID-related pressures. Supports include new programs for Managing Stress and Anxiety and Mental Health Resilience, a flexible hours policy to aid with parenting commitments, a work-from-home (telecommuting) policy as well as a number of online supports to foster wellbeing.

The City saw 186 people retire in 2020, down 4 per cent from 2019.

Yes, the City has seen a dramatic increase in the need for supports related to mental health, physical conditions and disease, stress management and parenting.

The City has seen 2,805 employees access mental health training supports in 2020, an increase of 534% when compared to 2019. Stress Management and Resilience program enrollment increased by 244% to 1214.