Eisenberger ‘optimistic’ about virus bailout

City pinning hopes on $32.6-million federal gas tax allocation to help fill virus-related budget hole

Hamilton city council is hoping for federal and provincial COVID-19 bailout cash to help patch a potential $61.6-million pandemic budget hole.

Without it, a 6.9 per cent special tax levy — on top of a projected 4.2 per cent hike in 2021 — is a theoretical remedy but political non-starter.

Another option — also unpopular, councillors suggested — is service cuts to avoid deficits, as going into the red is barred under the Municipal Act.

“I’m not keen on the cut, cut scenario. That is an austerity program that is a recipe for a downward spiral,” Mayor Fred Eisenberger said during Monday’s general issues committee meeting.

But Eisenberger said Hamilton need not “shoot itself in the foot” if the provincial and federal governments agree on a relief package for municipalities.

Prime Minister Justin Trudeau and Premier Doug Ford were expected to meet Tuesday to hash out what Eisenberger described as a jurisdictional “standoff” over a multibilliondollar envelope.

“I remain optimistic that the federal and provincial governments are going to sort it out.”

On Monday, city finance staff presented council with two scenarios: a three-month lockdown and six-month recovery, resulting in a $61.6-million deficit; and a nine-month lockdown and year-long recovery, making for a $122-million hole.

“This is an unprecedented time. These are nervous numbers,” Coun. Jason Farr said.

Council agreed to have staff pursue a series of measures to help shore up the city’s pandemic finances.

That includes putting $1.1 million in surplus capital dollars into a COVID-19 reserve and allocating $11.2 million of unused federal gas tax funds to projects instead of levy cash.

The city’s pandemic plan hinges on asking the federal government to double Hamilton’s 2020 gas tax allocation, depositing another $32.6 million in its coffers this year.

The city needs “firm commitments” from senior levels of government to help offset the local shortfalls, finance chief Mike Zegarac told councillors.

“While we don’t see a challenge for 2020, there may be challenges for 2021,” he said, referring to liquidity.

Staff have also identified 127 capital projects in 2020 that could be delayed to provide roughly $30 million for the pandemic effort.

Council would still have to give its sign-off before any of those projects — including West Harbour upgrades, park revamps and bridge work — are pushed to the back-burner.

All services should be analyzed, Coun. Maureen Wilson said, arguing struggling municipal golf courses are a drain on the city in contrast to services like transit, which “add to the wealth of this community.”

Coun. Judi Partridge, however, questioned why the city would expand the transit fleet given the slump in ridership due to physical-distancing and driver protocols. Closed HSR fare boxes have been a hobbled revenue stream for the city, along with other sources, including Flamboro Downs slot proceeds, recreational user fees and property tax payments.

At the same time, the virus has spiked costs for housing, public health, cleaning, ambulances, Ontario Works and technology.

Despite the crunch, Zegarac warned against raiding reserves, which are crucial for maintaining liquidity.

He noted municipalities are limited to property taxes, compared to the tools at the provincial and federal governments’ disposal. Moreover, heading into 2020 budget talks, the city already faced challenges with provincial cuts, notably to public health.

Zegarac also pointed to how the rise of e-commerce to the demise of “bricks-and-mortar” retail outlets during the pandemic threatens to further erode the assessment base.