Hamilton’s finance staff forecasting $23.7-million deficit for 2022

COVID-19 is proving to be a difficult virus to stop infecting Hamilton’s budget process.

As of the end of April, the city’s finance staff is projecting the city could have a $23.7-million deficit by the end of the year.

“COVID continues to have a significant impact to the city,” corporate services general manager Mike Zegarac told members of the July 7 audit and finance committee.

Zegarac said the healthy and safe communities department has been hit hard by COVID-19 requirements and essential programs. He said the department is projected to have a 13.1 per cent deficit by the end of 2022, or about $35 million. It includes $22.7 million for housing and shelter expenses, $8.1 million for public health, $4.4 million in staffing and operating costs for paramedics and fire and $1.5 million in lower slot machine revenues.

Zegarac said the city is forecasted to spend about $82 million on COVID-19-related expenses in 2022, compared to spending $100 million each in 2020 and 2021. The city is also projected to have a $37.5-million “unfunded” pressure.

Yet, said Zegarac, the federal and provincial governments are only committed to cover about $44.7 million of the city’s COVID-19 costs.

The city does have $35 million in a COVID-19 reserve fund created in 2020 that could be used to cover a portion of the COVID-19 spending.

But, said Zegarac, using the reserve fund “does not leave the city with much financial flexibility.”

Hamilton had a $33.8-million surplus for 2021, mainly because of the COVID-19 funding from senior levels of government. And in 2020, the city also had a year-end net surplus of about $49 million, while in 2019, the city, prior to the pandemic, saw a surplus of $14.7 million.

In 2021, the city received about $170 million in COVID-19 funding from provincial and federal governments to cover transit, health care and affordable housing costs. The city lost about $55 million in revenue from transit fares, and recreation and parking fees.

Zegarac said that so far, the provincial and federal governments have not yet committed any COVID-19 funds for 2022 to municipalities. Zegarac did warn councillors in 2021 that senior levels of government had yet to commit to further COVID-19 funding to municipalities for 2020, saying the funding was “drying up.”

“We are not getting the same response as in 2020, (or) 2022,” said Zegarac. “It is critical municipalities educate the senior levels of governments.”

City manager Janette Smith said Greater Toronto and Hamilton municipalities have made COVID-19 relief to municipalities a priority for the provincial and federal governments to consider.

Despite the sobering financial news, Ancaster Coun. Lloyd Ferguson wasn’t too worried, considering finance staff usually take a conservative approach in their budgeting process.

He said that in the past, finance staff, during their mid-year report to council, have forecasted a year-end deficit, but once the year is over, the city has a surplus.

“I’m not terribly concerned about it,” said Ferguson. “I suspect it is conservatism (in budgeting assumptions).”

Administrator