COVID-19 has proven to be a difficult virus to stop infecting Hamilton’s budget process.
As of late April, the city’s finance staff projected the city could have a $23.7 million deficit by the end of the year.
“Covid continues to have a significant impact on the city,” General Manager of Corporate Services Mike Žegarac told members of the Audit and Finance Committee on July 7.
Žegarac said the Department of Healthy and Safe Communities has been hit hard by the demands of COVID-19 and essential programs. He said the ministry is projected to have a deficit of 13.1 percent by the end of 2022, or about $35 million. It includes $22.7 million in housing and shelter costs, $8.1 million in public health, $4.4 million in personnel and operational costs for paramedics and firefighters and $1.5 million in less vending machine revenue.
Žegarac said the city is projected to spend about $82 million on COVID-19-related costs in 2022, compared to $100 million each in 2020 and 2021. The city is also projected to have an “unfunded” pressure of $37.5 million.
Still, Žegarac said, the federal and provincial governments have committed to cover only about $44.7 million of the city’s COVID-19 costs.
The city has $35 million in a COVID-19 reserve fund created in 2020 that could be used to cover some of the COVID-19 spending.
But, Žegarac said, using the reserve fund “doesn’t leave the city with much financial flexibility.”
Hamilton had a surplus of $33.8 million for 2021, mostly due to COVID-19 funding from higher levels of government. And in 2020, the city also had a net surplus at the end of the year of about $49 million, while in 2019, before the pandemic, the city had a surplus of $14.7 million.
In 2021, the city received about $170 million in COVID-19 funding from the provincial and federal governments to cover transit, health care and affordable housing costs. The city lost about $55 million in revenue from transit fares, recreation and parking fees.
Žegarac said that so far the provincial and federal governments have not yet allocated funds to municipalities to fight against COVID-19 for 2022. Žegarac warned the councilors in 2021 that the higher levels of government have yet to commit to further funding of municipalities for 2020 for COVID-19. saying funding is “drying up”.
“We are not getting the same answer as in 2020, (or) 2022,” said Žegarac. “It is crucial that municipalities educate higher levels of government.”
City Manager Janet Smith said the municipalities of Toronto and Hamilton have made helping municipalities deal with COVID-19 a priority for the provincial and federal governments.
Despite the sobering financial news, Ancaster Coun. Lloyd Ferguson wasn’t too worried, given that finance staff usually take a conservative approach to the budgeting process.
He said that in the past, the finance staff, during their semi-annual report to the council, projected a deficit at the end of the year, but when the year ends, the city has a surplus.
“I’m not too worried about it,” Ferguson said. “I doubt it’s conservatism (in the budget assumptions).”