City’s hot housing market shifts tax burden

Residential assessment growth outpaces business sectors

City manager Chris Murray says Hamilton’s hot housing market is partly to blame for job cuts at the city.

While the booming demand for local real estate has contributed to “a lot” of assessment growth on the residential side, commercial, industrial and office growth hasn’t kept the same pace, he said.

“That shift has put more burden on the residential taxpayer,” he said during a news conference Thursday.

The elimination of 23 management and other non-union jobs, announced Wednesday, is one step to try and combat a threatened tax hike.

City council has requested $20 million be cut from the 2017 operating budget, which otherwise could raise the average tax bill by four or five per cent.

“Council does not want to pass on large tax increases to its residents, so this translates to about a $20-million pressure we have to somehow address.”

Because residential valuations are outpacing the others, commercial, industrial and multi-residential taxpayers could actually see some tax relief, said city finance head Mike Zegarac.

Staff will bring forward a report Monday presenting possible tax policy measures to try to lessen the reassessment shift effects on residential property owners, he said.

Property assessments are conducted by the Municipal Property Assessment Corporation (MPAC) — a nonprofit corporation accountable to the province. MPAC updated the assessed values of every property in Ontario in 2016. Increases will be phased in over four years, starting in 2017 through 2020.

Murray announced Wednesday night that 11 directors, five managers and seven administrative staffers have either been terminated or agreed to early retirements as part of the cuts.

Another five managerial jobs were downgraded to supervisory roles.

Three of the eliminated director positions are from the city’s planning and economic development department, with two additional director possessions having been scrapped from public works, public health, emergency and community services and the city manager’s office, Murray said Thursday.

“This was a very difficult decision,” he added.

The changes announced Wednesday are expected to save $3.3 million a year, but first, the city has to swallow about $1.4 million severance and related costs.

Murray called the savings a “step in the right direction,” but didn’t rule out additional cuts. He said suggestions for how to save will be brought forward in the next couple of weeks.

“We have a four-year budget challenge unlike anything I think we’ve seen before,” he said.

“There are more measures we’re going to be presenting to council in terms of service level proposals and revenue opportunities.”

He pointed to a possible consolidation of emergency and community services and public health departments, as well as looking to a secret consulting report from last year that recommended up to 45 Ontario Works staff cuts.

Murray also cited that land-use planning and transportation planning are handled by two different departments.

“Maybe it might make some sense that they were amalgamated,” he said.

Hamilton residents were taxed for $828 million last year, with a 1.8 per cent average tax hike that added $67 to the so-called average owner of a home worth $295,300.

Over five years, the successive sub-two per cent increases have still added $317 to that average tax bill, plus another $124 for extra water rates. Those hikes are among the lowest in Ontario cities.