road weary tax burden

Roads make up the largest part of the city’s infrastructure deficit of $195 million a year.

Taxpayers get to keep a whopping $27

City hall has whittled down this year’s projected 2.4 per cent residential tax hike to 1.6 per cent — or an extra $53 on the average homeowner’s tax bill.

“That’s the lowest tax increase since amalgamation,” city finance chief Rob Rossini told councillors Thursday afternoon. “We’ve identified an additional $6.4 million in budget reductions.”

The new budget numbers come in the face of council’s resolve to achieve a zero increase to the tax levy with no cuts to service levels.

“Are we finished? No. How close we get to zero remains to be seen,” Rossini said.

The overall projected residential tax hike includes a .6 per cent increase for city departments, .6 per cent for boards and agencies, and .5 per cent for capital projects.

The total 1.6 per cent tax hike represents the weighted average of a 1.7 per cent total municipal tax hike and a .7 per cent education tax hike. Municipal taxes make up 80 per cent of the total residential tax bill and education 20 per cent. The average assessed house in Hamilton is $240,000.

“I was concerned that we would do something extreme that would put us in a difficult position next year,” Mayor Bob Bratina said. “The key question was if these reductions are sustainable or are they something we have to come back and fix next year.”

The budget process has been rife with major impact items, including labour relations, Ontario Municipal Employees Retirement System issues, cost of living allowances, a 5 per cent increase in the police budget and infrastructure costs, Rossini said.

Unlike Councillor Lloyd Ferguson, who said he still has questions about the police budget’s 5 per cent increase, Bratina said he had complete confidence in Chief Glenn De Caire’s “analysis of the needs of his department and the city.”

The tax hike decrease includes an $83.6-million — .5 per cent — capital budget levy approved by the general issues committee Thursday. Staff had recommended a 1.5 per cent capital budget levy increase but had to find about $7.4 million in savings by parking some projects, deferring others, and killing some altogether.

Among the delayed and deferred projects are the Hamilton Culture and Protocol Centre at Auchmar Estate, an antismoking education and signage program for parks and recreation areas, public art, Battlefield Park’s War of 1812 site interpretation, and Hamilton’s east-end air monitoring pilot project.

“Council wanted to focus on hard infrastructure, particularly our local roads program, so we were able to accommodate an $8 million increase to our local roads, which are on a replacement cycle right now of over 100 years, which is crazy,” Rossini said.

Roads make up the largest part of the city’s infrastructure deficit of $195 million a year.

http://www.thespec.com/news/local/article/496070--taxpayers-get-to-keep-a-whopping-27

more roadwork: more tax increases

City wants more roadwork

City council wants to put more money towards updating Hamilton’s battered roads — and councillors are open to reallocating money from other departments to help pay for it.

Road and traffic infrastructure was top of mind for councillors yesterday as they discussed the city’s capital budget.

Staff are recommending a yearly hike of 1.5 per cent for three years and 1 per cent for another seven years to help cover the costs of updating infrastructure. That would add $42 to the tax bill of the average home in Hamilton in 2011 and $9.75 million to the total budget.

Councillors were on board with dedicating extra money to infrastructure, but weren’t prepared to add the 1.5 per cent on top of increases to the city’s operating budget — currently sitting at 3.6 per cent, not including any wage hikes for staff.

“I’m prepared to spend this money, but I’m also prepared to eliminate other expenditures,” said Councillor Sam Merulla.

Council voted yesterday to ask staff for a report detailing “options and alternatives to free up funds” to put towards improving the city’s infrastructure. Councillors will debate that plan on Jan. 21.

Rob Rossini, the city’s general manager of finance, told councillors that his department has already allocated $2.7 million out of the waste management budget to put towards road repair. If council votes for the 1.5 per cent infrastructure surcharge, that revenue will be over and above the $2.7 million from waste management.

The city’s roads are measured on a scale, called the overall condition index, from 1 to 100 — 100 being a perfect road and 0 being a road at the absolute end of its lifespan. The city’s average is 55.8, which is estimated to fall to 46.9 over 10 years. It would cost $640 million over the next decade to maintain the status quo and avoid that decline.

“We’re in a slide. We’re getting to a point where rehabilitation won’t be effective,” said Gerry Davis, the city’s general manager of public works. “Spending a dollar today on the rehabilitation … saves us spending the equivalent of $4 for a full reconstruction.”

Last year’s budget included a 0.5 per cent increase for capital projects, while 2009 contributed no hike to infrastructure.

ereilly@thespec.com

905-526-2452

We keep building infrastructure we can’t afford to fix

CATCH News – June 3, 2010

Massive underspending on infrastructure confirmed

A new study has confirmed that the city needs to spend at least $120 million more each and every year to fix roads and other infrastructure. The report has some politicians pushing for more federal and provincial government grants, but at least one councillor is suggesting it’s time to stop building things we can’t afford to repair.

The city’s first provincially-required Tangible Capital Assets Report was presented to yesterday’s audit and administration committee. It records under-spending in Hamilton of $120.3 million last year on items such as roads, bridges, underground pipes, and water and sewer pipes and facilities.

“Based on the estimated replacement cost of $15.8 billion, an annual sustainable spending level to ensure that our assets are replaced and redeveloped in a timely manner would be approximately $333 million,” says the staff report accompanying the study. “Capital spending on asset replacement and redevelopments in 2009 amounted to $213.1 million, which resulted in a gap of $120 million.”

Similar shortfalls have gone on for years, and raising this amount from property taxes would require about a 25 percent increase in current rates or more. Last year’s deficit was actually lower than normal because the city received substantial stimulus funding from senior levels of government.

The biggest deficit ($91 million) in 2009 was in road spending, with water and wastewater facilities short $24.9 million and a deficit of $24.8 million for “underground and other networks”. The purchase of more than the average number of new buses last year meant that category had spending $15.6 million above the annual target.

Chad Collins and Terry Whitehead encouraged city staff to seek more funding from senior levels of government, with Collins proposing that road monies be the only requests made for any future infrastructure dollars. Council put road projects at the top of a long list submitted for stimulus funding, but the items actually supported were mainly for water projects and recreational facilities.

“When the programs come out at the provincial and federal level, does it make sense for us not to put anything else on the list, except for roads projects,” Collins suggested. “Maybe it’s a lesson learned for us, in light of what happened last time. I understand that we were trying to capture as much money as possible, but at the end of the day, making that list larger than maybe it should have been has probably cost us something as it relates to the infrastructure deficit related to roads and other projects like sidewalks and sort of water issues.”

Bob Bratina responded with a quite different approach.

“This looks to me like somebody’s got four clunker cars they can’t afford to fix, so he goes out and buys another car,” the ward two councillor observed. “And the comment that I hear at the table today is well the province didn’t give us enough money to fix these roads. I’m not very good at this accounting stuff, but this seems fairly simple to me. We keep building infrastructure we can’t afford to fix.”

City finance chief Rob Rossini responded that the report showed “how much stuff we actually own” and suggested that reduction is one of the objectives of the province in requiring the reports.

“Part of the rationale for the province doing this is for municipalities to look at their assets as to which ones do we still need, which ones can we surplus and rationalize on a going forward basis,” Rossini noted. “So I think that’s part of the underlying thing that the province wants us to do.”

Bratina pointed to the recent decision of well-known investor Warren Buffet who “just bought a railway” because he’s calculating its value will climb over the long haul.

“He said that the US highway system infrastructure is so broken down they can’t possibly fix it all to the level of sustaining the need for transportation. So he picked railroads. We’re not alone in this.”

Collins countered with a brief history of federal and provincial government cuts to transfers to municipalities over the last 15 years.

“While it’s all well and good that the books look a little better at the other levels of government, it’s come at the expense of municipalities, and all municipalities over the last decade have lobbied both levels of government for additional infrastructure funds to try and get back some of those historic traditional transfer payments that we were accustomed to utilizing over several decades,” he stated, urging staff to make more lobbying for increased payments a top priority.

Whitehead closed out the discussion by recounting Prime Minister Harper’s speech last weekend to the meeting of the Federation of Canadian Municipalities where the federal leader warned the focus of his government is on deficit reduction, not more stimulus funding. He said the city should expect to continue to get federal gas tax monies, but not additional funds.

That grant totals nearly $32 million a year – two-thirds of which was allocated to roads with the remainder helping pay for city hall renovations.

Councillors were told in January that the city is adding an average of 50-70 kilometre lanes of roadway each year and that annual maintenance costs for each kilometre lane are roughly $10,000. That report estimated that the infrastructure spending deficit is about $150 million a year.

CATCH (Citizens at City Hall) updates use transcripts and/or public documents to highlight information about Hamilton civic affairs that is not generally available in the mass media. Detailed reports of City Hall meetings can be reviewed at www.hamiltoncatch.org. You can receive all CATCH free updates by sending an email to info@HamiltonCATCH.org.

building past the budget lines

*CATCH News – **January 21, 2010*
*Infrastructure deficit: What was said*

This week the Public Works committee formally received a report http://www.hamilton.ca/CityDepartments/PublicWorks/CapitalPlanning/Asset+Management/SOTI/2009+SOTI+Report.htm> on the state of the city’s infrastructure warning that the spending shortfall for roads, pipes, facilities and other structures exceeds $150 million a year. That led to the following exchange between downtown councillor Bob Bratina and the general manager of public works, Gerry Davis, transcribed by CATCH.

Bratina: Gerry, how much does it cost to maintain a lane kilometre ?

Davis: Summer and winter included, it’s approximately $10,000 per lane kilometre.

Bratina: How many lane kilometres have we added in the last ten years, roughly?

Davis: We’ve added, I would say, probably upwards 500-700 lane kilometres.

Bratina: A year, on average?
Davis: On average about 50 or 70 a year, Rick? So 60.

Bratina: So if we can’t afford to maintain these lane kilometres of road, why do we add them? It begs the other question. It’s a bit rhetorical but we’re providing – do the development charges that we apply to development recover the costs?

Davis: Through the growth component, when a developer – they’ll pay for the hard services, the capital cost, primarily. There may be a local component – roads, water, sewers. And then that road is handed over to the municipality to maintain. And other services are then required by the municipality – and that’s public works, policing, fire. But what happens in areas – we have assessment growth generated by the property taxes. That doesn’t come specifically to the police or fire or public works for waste collection, road maintenance, but there is a growth in revenues. I’m not saying it covers everything but that is, the capital cost is, primarily paid by the developer.

Bratina: Okay, so the evidence is that this so-called growth isn’t working because we’re $145 million a year short. So who should pay for that? And what I’m suggesting is that we’re building cheap houses for people who work in other communities. We hear this constantly shoved down our throat about how many people leave the city every day to go to work somewhere else. Well that’s because somebody who’s got a job in Peel can’t afford, at his wages a house there, so they get a nice taxpayer-subsidized house in Hamilton.
A good example is Maple Leaf , because the average, the 900 or so on the production line, mostly live in Hamilton, because they can’t afford on the wages they get to live there.
So we have to consider as a council, and get the accurate information. It’s fine to say well we’re going to get all these new taxes from all these new houses. There’s your proof that we’re not getting the money back. And if you look at a growing community – like let’s say Alberta – Edmonton and the oil boom – they’re desperately short of houses. And there’s new jobs, there’s new people moving in. They’ve got to build houses. We don’t. We don’t have all these new jobs being created. All we’re doing is subsidizing residences for people who work elsewhere.


CATCH (Citizens at City Hall) updates use transcripts and/or public documents to highlight information about Hamilton civic affairs that is not generally available in the mass media. Detailed reports of City Hall meetings can be reviewed at www.hamiltoncatch.org . You can receive all CATCH free updates by sending an email to info@HamiltonCATCH.org