City budget a bitter, but defensible pill

Can a 6.7 per cent budget increase for the city of Hamilton be considered a success story?

That’s approximately what taxpayers will be faced with at the end of this month when city council signs off on the 2023 budget and resulting tax increase. It’s a safe bet that right about now many taxpayers will be offering an unequivocal “no” in answer to the question.

Fair enough. An increase pushing seven per cent is certainly hefty, and for many taxpayers, already struggling with the cost of living, it’s a tough pill to swallow. That’s especially true for people getting by on fixed incomes, facing sky-high food, utility and just about everything else bills. Some renters will probably feel it, too.

(It is worth bearing in mind that how this shakes down to your tax bill will depend on where you live and other factors, some of which are not within local control, like property value assessment, which is provincially controlled.)

So shake your fist and rant if it makes you feel better — we all need that sometimes in this challenging climate. But at some point, it also makes sense to sit back and consider the context of this budget. That may or may not make you feel better, but it’s worth doing anyway.

How does this compare to other municipalities? It’s about in the middle of 10 other Ontario cities. Toronto, Niagara Falls, West Lincoln and Halton Region are all looking at increases in excess of seven per cent. Ottawa, London, Guelph, Windsor and Peel Region range from 2.5 per cent 5.3 per cent.

So why are municipal budgets and taxes increasing at higher rates than in recent years? Inflation is a factor, but it is relatively recent whereas many of the issues influencing city finances are much longer term.

Downloading of one sort or another is a factor. That’s where senior governments, the province especially, off-load financial responsibilities. The feds do it to provinces, provinces do it to cities, and cities/towns have no one left to download it onto, other than taxpayers.

The lingering impact of the pandemic is another. City staff explain that $22.5 million in provincial pandemic relief, in particular for social services, has ended, but the needs remain.

Bear this in mind: Federal and provincial governments can start funding something, then stop. But municipal governments are the last resort — if they stop funding services, the services stop or have to be picked up by the non-profit/community sector.

About now some will be saying that this equation is simple. If city hall can’t pay for services with existing resources, stop delivering the services. But which services to cut? Recreation and parks? Public transit? Roads and sidewalks? Libraries?

If you put a dozen of us in a room no doubt we could all come up with a few areas to reduce or eliminate funding for, but it’s also a safe bet our preferences wouldn’t be ones that have direct impact on our families.

Consider the homelessness and affordable housing sectors, as prime examples. These are not strictly local issues, but they have to be paid for by someone, and the provincial government is reducing support, at the same time as it has a budget surplus. Demand for housing the vulnerable is growing, but provincial and federal support is not, which leaves us — local taxpayers — to support essential and growing service needs.

Which brings us to the great and repeating irony, discussed in this space many times. Local governments are the closest to the ground. They provide the most tangible services, from safe water and streets to parks and recreation. But they also have the least amount of flexibility regarding how to pay for those services. The federal and provincial governments can run deficits, municipalities cannot. They have pitifully few levers to push on funding, and the main one is local taxes.

So back to the initial question: Can this sort of increase be a good news story? Not entirely, but it’s probably the best we can hope for under the circumstances and in these times. Some past Hamilton councils have kept tax increases artificially low to avoid blowback, but we can see now that’s not a sustainable strategy. This is a more realistic approach.