1. City of Hamilton 2007 Tax Budget Update January 8th, 2007

2. City of Hamilton Introduction City Manager

3. City of Hamilton Operating Budget Highlights General Manager of Corporate Services

4. 4 2006 Tax Budget by Dept $1.04 Billion (Gross)

5. 5 2006 Tax Budget by Expense $1.04 Billion (Gross)

6. 6 2006 Tax Budget Revenue $1.04 Billion (Gross)

7. 7 Components of the Residential Municipal Tax Impact Budget x% Reassessment y% + Tax Policies (ratios, area rating) z% + = Total Tax Impact x% + y% + z% = 0%

8. 8 Draft budget contains no service or program reductions. Roll-out of Council approved Solid Waste Management Master Plan –target 65% waste diversion avoids need to search for a new landfill. –45% diversion expected in 2007 (2001 = 16%) $2.7m in additional Public Health subsidy providing -$1.2M reduction to levy while increasing gross program spending over $1.5M. Second phase of tree trimming enhancement approved in 2006. 2007 Budget Highlights

9. 9 Revised Winter Control forecast reduces final phase-in from $1.9m to $0.3m. Energy prices stabilized, not a significant pressure for 2007. 2007 Budget Highlights

10. 10 2007 Draft Net Operating Budget Note – All figures rounded

11. 11 Tax Policies Levy Restriction – only able to tax commercial and industrial properties 50% of the residential tax increase. Education tax rates will remain at 2006 levels. There is no reassessment this year. Draft budget assumes no changes to tax ratios or other tax policies. Evaluate impact of moving C/I to threshold Tax ratio and other tax policy options will be presented to Council during deliberations.

12. 12 Residential Tax Impact Note – All figures rounded Provincial levy restrictions on commercial & industrial classes cause residential taxes to increase 4.5% instead of 3.8%

13. 13 For 2006 an additional $2.6 million was received. 2006 Budget = $33.1m. The 2007 allocation is based on final 2006 = $2.6m increase over 2006 budget. 2007 Budget = $35.7m. Risk that other provincial funding may be adjusted. Staff estimate approximately $1.2m net shortfall for ODB/ODSP/Housing despite additional OMPF. Ontario Municipal Partnership Fund

14. 14 Budget Pressures Waste- Diversion initiatives (2006 app’d) 3.0 Capital program (0.5% of levy)2.9 ODSP/ODB & other2.5 Tax assessment / write offs2.3 Homes for the aged2.2 Culture & recreation1.4 Housing-mandated benchmark increase1.4 Waste – recycling revenue loss1.3 Library1.1 Transit (Risk, Parts)1.0 Additional OMPF Funding(2.6) Fuel Tax (Provincial) – Transit(0.9) Other (Investment, Supplementary tax)(0.7) $ millions

15. 15 Assessment Appeals

16. 16 Assessment Growth 1% growth equals approximately $5m

17. 17 2007 Draft Net of Extraordinary Items Note – $ Millions; all figures rounded. Res. Tax Increase

18. 18 Referred Items / Enhancements Council Referred $1.2M - includes NCB programs, Farmer’s Market parking, Floral Traffic Island. Legislated $0.5M - includes Grow-op inspections, Homes – Dieticians. Zero-Net – do not affect levy Safety $1.4M – Ancaster & Flamborough Fire Other (including staff review and CoW motions) Enhancements of $5M would = 1% tax impact Items referred by Council to the 2007 budget process And other enhancements.

19. 19 Potential Tax Impact on an Average Home ($205,000 Assessment) * - For illustrative purposes example of $5m enhancements used. Area rating may increase or decrease final impact by community.

20. 20 Area Rating Some program enhancements will have area rated impact: –Transit (Stoney Creek, Hamilton, Dundas) –Fire (Ancaster & Flamborough) Borers Creek debt retired. Additional $1.5m in slot revenue. Revenue has been included in draft budget but decision on allocation pending. Area Rating sub-committee to report back during process

21. 21 Tax Capping program (mandated) Transit Fare options Additional provincial revenue to match mandated social services shortfall ($1.2m). Reviewing assessment appeal provision. Revenue strategy (eg. PIL’s). Energy - Interval metering Continued review of budget submissions. Review of 2006 actuals during year-end process. Potential Reduction Options

22. 22 Provincial funding budgeted at $17 million. EMS Operational review Living Wage review Risk Management (claims still exceed budget; utilizing reserves). Energy prices – No contingency for sustained price spikes. Winter Control based on average. Job Equity (collective agreement) costs could exceed contingencies. Most user fees assumed inflationary increase. Risks & Assumptions

23. City of Hamilton Capital Budget Highlights General Manager of Corporate Services

24. 24 2007 Capital Budget As per final 2006 Budget Report, Staff continued the following Capital strategies for 2007 : 1. Not to further increase debt levels 2. Direct additional funding to Roads/ Facilities Rehabilitation and Council’s Strategic Capital Program. 3. Meet with each individual Councilor regarding Ward specific Capital Plan.

25. 25 2007-2016 Available Capital Funding

26. 26 2007-2016 Available Capital Funding

27. 27 2007 Proposed Capital Budget

28. 28 City Capital Program – Growth History Proposed

29. 29 2007 Capital Budget Increase in proposed Capital Budget due mainly to increased Fed/Prov Subsidies and HFF funding: 1. Roads rehab $15m. 2. Employment Lands $11.5m 3. Federal Gas Tax $3.1m 4. Future Fund Loan $17.3m (waste/roads) Total $47 million

30. 30 GAS TAX FUNDING/FORECAST Revenue Sources 20052006200720082009 Federal Gas Tax$9.6M $12.7M$15.9M$31.9M Transit Federal Gas Tax $0$4.9M??? Provincial Gas Tax $5.9M$8.6M$11.4M TOTAL$15.5M$23.1M$24.1M+$27.3M+$43.3M+

31. 31 Outstanding Debt

32. 32 Debt Charges

33. 33 Capital Program Forecast

34. 34 Affordable Capital Program

35. 35 Affordable Capital Issues 10-year Infrastructure Shortfall at a minimum $620 million. Roads Repair and Rehabilitation = Fully Funded Facilities shortfall = $30m + annually Park Development shortfall = $5m annually Forestry shortfall = $20m + annually Additional Waste Management Requirements ??? Minimal capacity for any new capital initiatives.

36. 36 Affordable Capital Program Capacity has been used for: –Waste Management Master Plan –Red Hill Valley Project –Facilities (City Hall, Wentworth Lodge) Unaffordable Capital over the next 10-years is at a minimum $620 million Two Options regarding a Capital Levy Increase. Option 1 = 0.5% tax levy increase for Capital$2.9M Option 2 = 1.0% tax levy increase for Capital $5.7M Note: Either option could be enhanced with additional borrowing from the Hamilton Future Fund

37. 37 2007 Draft Capital Budget Option 2, generates additional $150 million over 10 years Require sustainable funding from senior levels of government, particularly older cities All larger/mature municipalities face this magnitude of capital funding shortfall.

38. 38 Operating Budget Impact

39. 39 Development of Financial Sustainability Plan Infrastructure review Multi-Year budgeting Assessment growth and business retention Develop during 2007 Sustainability Plan

40. 40 Next Steps Jan 8 th CoW – Budget update Early Feb – Print & Distribute Budget Books Feb – User Fee Report Feb – Department presentations Feb – Public delegations Feb/Mar – Budget deliberations Mar – Budget Approval Feb-Apr – Tax Policy / Area Rating