April 21, 2004 Report

Present: Mayor DiIanni, Councillors McHattie, Horwath, Morelli, Merulla, Collins, Jackson, Kelly, Whitehead, Bruckler, Pearson, Mitchell, Ferguson, Powers, Braden, McCarthy

Agenda. Continuation of big budget book

Kevin Christenson (Clerk): Introducing my new deputy clerk Salter Hayden. Salter comes to us from an extensive background as clerk in West Lincoln - city manager out that way. He started Monday and kept showing up for the last few days so I think we're on to something here.

Mayor: - Welcome Salter to the city and I had a chance to speak to (?).... and she said some very nice things . Welcome also to member of the public particular Jim Pocius (or ?Tim Porteous ?) who is sitting in the gallery and was asked by his mother to be here and to e-mail her directly after. I'm not kidding - she wants to know.

Mayor: Mr Clerk - are there any changes to the agenda?

Clerk - Yes, We have an additional report respecting corporate communications budget CM04018 presented by the city manager.

We have a referral recommendation by the social and health committee respecting food safety and the safety and by-law enforcement items which are currently on the unaffordable enhancement list.

We have an additional press release from the Ham. Chamber of Commerce respecting the BTR program

The orders of business for today are the BTR presentation, the legislative budget, items noted on the memorandum which was previously circulated .?..boards and agencies and of course we are going to get to the approval of the tax levy too.

Mayor: - Of course we are.

Mayor: Members of Council - are there any declarations of interest?

Horwath On the issue of restaurant inspections and smoking by-law I would like to declare a possible interest

Mayor: - So noted. . may I have a verbal motion to approve the minutes of the April 15 COW meeting Moved by ..?., 2nd by Pearson. All in favour? That's carried.

We do have one housekeeping matter. Mr Clerk, what is that?

We would require a motion to reconsider and rescind the motion approved on March 31 which stated the following:

Moved by McHattie and 2nd by Whitehead that for the 2004 budget year the pass rates for the McM Univ. students of the 2004-5 school year be capped at 5% and be set as follows: $68.25 for undergraduates and McM students union and $102 for graduates and the graduate students association.

That was passed before we then passed not to do any increases so that's the reason to rescind so -if it's acceptable I will entertain a motion. if someone wants to move it.

Moved by McHattie, 2nd by C. Kelly. all in favour? That's carried.

...?...

Moved by McHattie again, 2nd by Kelly. Now we're dealing with the motion to rescind. All in favour of that? That's carried..

The next item is the business tax reduction plan and you received the report, you've had it with you and Mr. Rinaldo is here to answer any questions you may have. and will open the floor to questions.

Merulla: Could we have Mr Rinaldo go through the report?

Mayor: We'll do that if it's OK with Council Joe, will you take us through the highlights of the report?

Rinaldo: There are 2 reports the first deals with the background information you had asked in terms of the dollars that were invested into the BTR and if you have my presentation with you, I'll just highlight a few of the more significant ones for you. The information I believe I was requested is on slide #3 which shows the amount of dollars that were invested. As you can see from the slide it's $89 million from 1998 to 2003 when there was a number missing for business and education when the province made some reductions, We weren't able to find the number I won't go through all the slides, but the amount of assessment generated in ..? . It was somewhere in the excess of $90 million is the amount that was invested. When you look at the assessment growth and I won't go into all.. the amount of assessment generated and I was not able to get the same information for 98 to 2000 but the amount of assessment generated was $3.6 million. It's important to understand that in reality the supplementary tax that we have been generating on an annualized basis is much higher and that's because the assessment growth factors in some loss in assessment through assessment appeals adjustments made an impact that went back all the way to 1997 in some cases. A good example of that is the assessment appeal for Stelco which was retroactive back to 1997. You should know that during the years 99 to 2000, 2001,2002 there was other properties like that - that in fact their values were going down, went down, so the assessment growth by itself does not truly reflect, so I was trying to highlight that. In the next table show you the amount of building permit activities

I then provided you some comparable charts over slides 7,8,9 that shows what's happening. We;'ve been making some significant grounds with the exception of small industrials. That's because their assessed values have been growing at a faster rate than the other commercial industrial values, and that's because we haven't made as much ground as we have with the other properties. The important thing to remember is when you look at slide 10 which is the tax rates, the absolute tax rates when we started the program the large industrials were paying a 13% tax rate on their properties. We're now down to a more manageable number of 7.8 which is a lot more comparable and makes it a lot different and likewise on our industrial. We've made some grounds on all of them As you can see we're getting at a much more closer level in terms of competitive rates.

What I'm going to highlight now is the second report. I'm skipping to the more important things.

Slide 13 - March 15, you may recall the province announced two significant changes .in the policies. One is the province is going to allow the ability for the city to offset re-assessment tax shifts between property classes which means in effect that we have to increase our tax rate in order to achieve that. When we presented you the re-assessment we told you that there was a 1.1% back shift to residential. The province is saying now that you have the flexibility as Council to not make that happen. It also gives you the ability to pass on a maximum of 50% of the residential budgetary tax increase to protect the classes, In other words, the commercial and industrial classes in our case. Those are the 2 significant changes in that legislation, and they've given you those options in that part of it. I'm going to slide 18 and remind you of what the options were.

Option ( ...?.. 1). What would happen under our existing budget right now as I indicated in my re-assessment report there is a re-assessment tax shift of 1.1% . I've used 5.9 to point out I did it on the March 12 report as this is always moving. We'll have to do it all again - all the calculations again once Council finalizes the budget, as all of these things change. In effect we are currently using the March 12 report - we're currently around 5.7% if you factor in the re-assessment.

Option 2 is an option that takes advantage of all of the tools that the province has given to us.It other words, it allows us to take half of the class and optimizes the use of the tools. In effect that would mean if we did that the shift of the tax would go from 7 to 7.4%. You should know you can go anywhere between those 2 if you want. (..?/ static )

What it means in option 1 - the re-assessment impact gets transferred to the residential in accordance with the traditional plan we would do and that's the effect on the multi-res is 3 ½%, on the commercial 5% and the industrial -11.

Option 2 that's taking advantage of all the tools It's passing on all the education tax reduction which the re-assessment will create to the residential class, is taking away the PTR the $2 million to the PTR - probably we wouldn't get anything from the province and likely the impact would be 4.6 in the residential class, 2.7 for the multi-residential class, 1.7 for commercial and 2.1 for industrial. However, what would happen is that we would be moving away from our thresholds.

Option 3. Option 3 tries to minimize the impacts of the assessment, which is what I said we did. It assumes that the province will give us the BTR. You should know that I have spoken to the province and what they are doing right now is waiting for the Council to decide whether or not you are going to be asking for the money. In terms of how much money you'll be asking for because depending what option you have - it maybe something less than that - anywhere from 0 to $9 million.

The indication I'm getting from the province is that they will likely support whatever Council comes forward with. Again it's subject to the Minister of Finance 's approval - I want to make that absolutely clear to you. So, generally speaking the staff are very supportive of our program and they're just waiting for the Council to make a decision on it. So this option puts $2 million of our assessment bills to the BTR - our city dollars. $5 million gets applied to the levy, to reduce the tax levy. The net effect is about 6% - obviously that number will change because of the changes you made in the budget - it will be lower than that. 64.3% to the multi-residential class , 5 1/2% to the commercial class and 3.8% on the various classes.

In terms of the tax ratios, as you can see, if we go to option 2 we will not reach the thresholds. What we try to do is follow Council's policies to get us to the thresholds as quickly as possible and we are at the thresholds for the 2.74 for the province. We are at the thresholds for commercial, we still have a ways to go for the industrial and large industrial. So we have attempted as part of the policy to be consistent with Council's directions to achieve those thresholds. I'd like to summarize a few things on my summary page

There are a couple of very important issues that we still have to do. We are running out of time. We need some decisions on the BTR, hopefully by Council today so that we can try to meet the deadline for our tax bills. If we can get a decision on that today, that would be very helpful.

Our plan would be (..?..) to come forward with some of the area rating May 5th and phase in plans in passing a by-law May 12 th . That is really stretching it for us,. We really need to have a decision on the BTR, hopefully today and sometime next week the finalization of the budget, or if not we're going to be delaying the tax bills. We're trying to get the by-law by May 12 th and I know my tax staff are telling me that is going to be a real stretch for them to achieve it. so that's a summary of the BTR Report and I'll be happy to answer some questions.

Mayor: Neil, you still have the floor.

Merulla: If we were to lower the contribution to $8 million would that attack provincial contribution to the program?

Rinaldo: Yes There is a matching impact. The concept fo the province is matching. They haven't made it clear to us how they're going to do it but generally speaking, they match e.g If you put in $9 million they put in 9 Million

Merulla: If we put in 7, they put in 7

Rinaldo: Yes., that is how they work

Merulla: So, we're not jeopardizing any provincial money as long as the matching will exist, even if we put 2 million towards it.

Rinaldo: But you're only going to get whatever dollars you put in. If you put $2 million in you're only going to get 2 from the province

Merulla: OK, so at the appropriate time I'm going to move that we go to 7 million and that will be 2 nd by C. Collins, so we're not jeopardizing any actual funding per se, what we're in essence doing is just incrementally moving towards the threshold that was highlighted, rather than radically moving forward. and when you look at the actual report itself and I understand that this is a long term type of goal, but at the end of the day you're looking at an over $30 million investment. We've received in actual assessment growth 3.6 million. Is that correct? Mr. Mayor?

Merulla: . I'm just wondering - The actual rate of return has been approximately 10% on the assessment?

Rinaldo: in terms of assessment - true assessment - that's correct. the big question that we don't know is I think Neil can show you some letters. We know that some businesses may move here and some businesses may not have stayed. they may have moved out of Hamilton and that's a question I don't know. It's really hard for staff to give us that information. Neil is closer to that side of it than I am so you may want to ask him those questions.

Merulla: How do we explain though to Proctor& Gamble, Camco and all those companies that have left - What will those other companies that have left under the present structure if you're using that side of the argument. I think that's my concern is that a lot of this might be just a pig in a poke. It's a lot of money just to take from the residential tax base to give to the business tax base, if indeed we're not definitive in our assessment of this program. I realize that it's a long term program and I realize there's a trickle down impact to it, but I don't see it trickling down. I'll be honest with you. I'll still support it on the faith many people have of this program but I do have some serious reservations about throwing $9 million into it without actually recognizing or realizing what potentially we might actually gain from it.

I prefer actually to take it down even further . I'm not sure if there's a will on Council to do that, but I think there is a will to be balanced and reasonable. $7 million won't have that much of an impact on the bottom line. because $30 million really hasn't had that much of an impact. so at the end of the day I'd prefer to go down to about 2 or 3 , but I do have the motion to ..?.. about $7 million.

Mayor: At the appropriate time I'll take that motion.

Kelly: I beg to disagree with my colleague. One of the things we've talked about here is economic growth and maybe what we need to do is to put this thing in context. when the council of the day initially passed the BTR program, we were applauded by the business community and the greater business community - not just here but across the province and country for our initiative. for trying to correct a problem - a long standing problem this city has had. Without throwing darts at past councillor, one of the most short-sighted things that Council did was many, many years ago was to pay no attention to business and didn't try to help business and as we know, those of us who have lived in this community for many years - one of the things that put us into the financial predicament we're in right now is that businesses left this city in droves over the last 25 years. Others never came here in the first place because it was not an attractive place to locate and to set up shop. They're gone - they're gone to Cambridge, they're gone to Burlington, they're gone to Brantford. The list is endless and we know what those are.

That's history, but the BTR program - one of the reasons this was set up was to try to correct that problem .and it's been extremely effective. I'll ask Neil about some of those details. If we take a unit dollar out of this program, it's one of the most short-sighted, wrong-headed things we could do. This is tantamount to holding a rope for somebody to try to get out of a hole they're in and when they get to the top, letting go of the rope and letting them fall back down. We can't afford to go back. We simply can't afford to. In my mind we'd show the same sort of short-sightedness past Councils did that got us into the financial predicament that we're in. The BTR is one of the saving graces of this community and not something we have to be nit picking at and taking away from. We've already seen past councils and and past history indicate that if we start to backtrack on this, the results are catastrophic.

And to know just how tenuous we are in a situation like this, I want to refer to what Joe talked about and that is the economic impact on this. Some of the things that C. Merulla referred to quite frankly do not fall within the realm of anything we can do around here. Levi Strauss shut down their whole N. American operation. That has nothing at all to do with the Hamilton economy. Camco is actually making money at the Hamilton plant, but the parent company is getting slaughtered by Pacific Rim. You can make appliances cheaper in China than they do in Hamilton, and a lot of it's labour, so there's not much we can do about that. These are facts. of international economics. There's nothing we can do about this, but what we can do is to try to attract other businesses. May I ask Mr. Everson.. One of the major things that we've tried to do over the last few years is to attract business and to retain businesses in this community to. Is the business tax reduction a key element in those discussions?

Everson: Absolutely. I get asked 3 questions when we get a plan inquiry. 1)Do you have the available land and building? 2) what are your municipal taxes? 3) do you have adequate labour supply?

Municipal taxes is right up there. I was doing a presentation to the Ministry in Toronto a week taxes. It was myself and Ottawa. We had to list some of our ratios and challenges. For Ottawa business taxes were not a recognized issue because as my counterpart says, If you're in Ottawa, you're not going to locate in Cornwall. But in Hamilton, we have competing neighbouring municipalities. It's not just what Joe talks about in terms of provincial threshold. In fact, the neighbouring municipalities are below that threshold. For a large industrial building at 100,000 sq. feet, Burlington/Halton municipalities are at least $.70 differential in terms of property taxes a square foot. so, for 100,000 sq. feet that's $70,000 a year and over a 5-year lease it's over $350,000. That's enough to make a decision to move to another municipality.

That's come down a long way from what it was 3 years ago, and we're seeing the number of inquiries we get in the department, especially from GTA municipalities that are now looking at us because obviously Hamilton has a lot of benefits in terms of gridlock, cost of land and other issues. We have to stay at least to the provincial average. Otherwise there is no way we can compete. It's a big factor - absolutely.

Kelly : One of the points I was trying to make at Council last week was a report that came up that indicated that Oshawa, Kitchener and Hamilton were the 3 fastest growing economies in Canada in 2003 - one of the top 3 in Canada. That means business growth in this community, not withstanding what we've talked about some of the things that have happened here, some of the negatives that happen in every community, but one of the top 3. Notwithstanding the fact that there is still some concern and reservations about what may happen with some of the major employers here. The same report indicates that even with those things a strengthening service sector is going to allow for GDP growth to still come in at 2.3% in 2004. More growth predicted for Hamilton. Business is starting to come back to Hamilton, Business is starting to stay in Hamilton.

We talked about what good is this doing? First of all, we don't have businesses leaving here anymore. For the shoe stores on Concession st. Ottawa St and the auto parts manufacturing plants - last year alone, 3 automotive parts companies re-located from Oakville alone - Oakville, the panacea where businesses go have decided to expand into Hamilton. Tiercom((?) with 2 plants, Stackpole with 2 plants, Magnatech - 690,000 sq. feet of new business growhth come to this community. The BTR program is a magnet- it's attracting business. We also have the best year since 1990 with industrial building permits- $87 million of industrial building permits issued in this city last year. That equates to about 2 million sq feet of industrial growth. Those are jobs. those are people who work in this community, who can afford to live in this community, stay in this community instead of driving off to go to Mississauga and Toronto every day to go to work. The BTR is working. To take even $1 out of it would be catastrophic. And I strongly urge my Council colleagues to turn down the motion that will be coming forward and move towards option 3 for the long term effect. I intend to stay in this comunity and to raise my family in this community and we need to have an economic revival community and we need this program to do it.

Merulla: Just based on what was said, right now to Mr. Everson -what land is actually available where we can actually attract business to the city, how much land is available- from an industrial standpoint?

Everson: Probably in the range of 4 to 600 acres, but unfortunately not all in large parcels.

Merulla: So even if we had major corporations wanting to knock on the door, as a result of the BTR, we couldn't service them at this point, could we?

Everson: We could service some of them, but it depends on timing issues.

Merulla: you have emphasized in the past. I have serious concerns about the fact that we can't service them and we need to move forward quickly so that we can actually entertain requests that are coming forward.

Everson: Yes, and that's an objective of the grids program.

Merulla : in essence, what we're doing then is throwing $30 million into a program and an additional $9 million based on what I now consider to be an argument that was presented by the previous speaker as totally flawed because we can't even service where we can accommodate whatever demands there are, so we're throwing $9 million to this from the residential tax base So you're taking $9 million from seniors, from people with disabilities, from the middle income earners in the city and we're shifting it over to the business class. What that is is making the rich richer ad the poor poorer. Because there's no rhyme or reason except for this 10% return that even from a business standpoint. I'll look into it, but I'll speak to someone at the DeGroote School of Business - if you have $30 million and you have this rate of return, would it be a good business decision? I say not. I'm not saying eliminate it - I'm saying let's move incrementally. Take it down a notch to 7 million.

McHattie: I'm chair of the Hamilton area BIA committee. That group is tremendously interested in this discussion. It's something we've talked a lot about in the committee. Those businesses are integral to the economic health of Hamilton. Many of them have been here for 30-40 years and will be here for another 30-40 years. They're committed to Hamilton. They're not like a multi-national company that comes in and then perhaps takes off to China and will hold us to ransom for a deal that we really can't make here in Hamilton. We don't really have control over that sort of situation so that's a difficult situation.

The BIAs are very different. They're here and committed to Hamilton and they've been here for along time. They're in our communities - on Ottawa St., on Barton st. on Concession st. in my own area of Westdale Village. These are very important areas, and they have made it clear that the commercial aspect of our taxes needs to come down to the provincial average. There's no question for them. They've got to compete with other municipalities around us so the minimum has to come down to the provincial average. No matter what is discussed in terms of reducing the BTR - I can see some movement for reducing it, perhaps a little bit perhaps along the lines that C.Merulla was talking about or something in that range.

The recommendation put together by our finance folks has a part 1 and a part 2. It talks about $2 million funded from assessment growth to reduce commercial municipal taxes. and bring the commercial property class down to the provincial threshold. This is report FCS-04055 I have to support that . That has to come down. to the provincial threshold. That's a given from my perspective and I think it can be supported from the fact that our BIAs are integral parts of our economic fabric in Hamilton - a really grassroots economic development I would say. and very tied to the health of our community, not just the health of the overall economic climate in Hamilton. I appreciated this report because I had asked for evidence of the BTR having an effect here in Hamilton, a lot of anecdotal evidence, a lot of discussion but I really haven't seen very much on paper so we've started to move in that direction There's a lot of good information here and in this report on page 4 of 8 it talks about the difficulties involved in isolating

( end of tape A )...

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21 APRIL 2004 COW Tape Side B

McHattie ( continued )... under the importance of the BTR and the importance of retaining businesses -it indicates it's very difficult to actually measure this Nd I think that's an intereting observations by staff . In August of 2003 the Economic Development Dept. instituted a data base calld Gold Mine which is a lead tracking and data base system. However it says the BTR as a location factor is not one of the times being monitored. That's curious to me that we didn't choose to track the BTR as that's information we could have used to substantiate the BTR being something we want to support to the fullest amount possible. That causes me some discomfort. However they go on to say staff will now begin to include BTR within the surveys. That's great to hear. we'll be able to track and get a sense of the real impact of the BTR program. I't something I think we need to support in this community. I think from a commercial perspective we have to get down to the provincial threshold . Those are local grassroots businesses. We need to continue to lower the industrial tax ratio as well . The question today is how much we need to invest in that this year. We've gat a $9million figure - I'm not sure where that came from. Why 7 versus 9? Why not 11? That's something I'm uncertain of. I think I could certainly support the reduction perhaps on the lines of what C. Merulla is speaking of the $2million reduction down to 7, or perhaps 8 is a number we may settle on. I'd like to encourage staff to continue gathering the evidence and I know it's a factor of not having a lot of staff to do that work and that's something we need to think about as well. I'm encouraged to see that new data base in place. We didn't include BTR before in terms of monitoring that . It doesn't give us the information we need today to make that decision, but hopefully over the rest of the this year and moving towards next year we can do that.

Following up on C. Merulla's point to clarify in my own mind as I don't know the answer If we're attracting new businesses to the city and the serviced land is a questions I'd like to clarify I guess to Neil. I know the Glanbrook business park relates to the Red Hill Expressway being built and the hope that industry will settle in that area is a critical part of the expressway project. And the airport lands are critical as well. I'd like to get a sense of just ballpark figure if that's all we have of servicing those areas. For Glanbrook I may be off base and I'm uncertain of what the airport lands may cost to be serviced. That is a future-oriented activity we're going to undertake over the next 5 to 10 years as we hope to increase the economic health of the city I think that does relate to our BTR discussion.

Everson: The last number I had came out of our Hemson report and this was for all external servicing of all business parks throughout the city It was approximatley $134 million. That would be for all the current re-zones and industrial land.

McHattie: That would include the airport as well, as far as you know?

Everson: yes.

McHattie : that's a pretty huge number for a city with the challenges we have and one that we have to strive towards, I think. I think that does affect the industrial location issues that we're discussing today as part of the BTR program. I would certainly support a reduction of the BTR and I look forward to a further discussion and that but I would very much like to ask my colleagues to consider the BIA areas in your area and the important work that they do and see if we can't get that down to the provincial average this year.

Mayor: The implied question in your comment is what number will get us to that provincial level. Let's turn that over to Joe - the 9 -7 million ? What gets us down to where we want to be?

Rinaldo: We developed the report on a basis of trying to get the commercial class to the threshold and that's why we put in the $2 million in there - the 9 million. The 7 million is just to remind everybody that's more for helping the businesses passing on the tax decreases cause as you know there's a cap on anybody going up and therefore the 7 million is used to reduce - to pass on the tax decreaseesfor any property whose assessment has gone down. The $2 million more generic helps us get down to the threshold. That's the direction we had from council in the past and we followed that direction . In order for us to get to the threshold for the commercial class, which is the BIAs we have to include the $2million.

McHattie: So if we go down to $7 million for the overall program this year, can still allocate that 7 million n such a way should we desire - which I would desire - to bring the commercial down to the provincial average?

Rinaldo: That $7 million is ued to pass on tax decreases. any businesseswhoe taxes have gone down help pass on the tax decreases. What would happen if we don't have the 7 million is they'll all get cut back because no business can get a tax increase beyond 5%. We use that 7 million to claw back to make sure that we pass on tax decreases for businesses whose assessment have gone down.

Mayor: Can we use the 7 million to reduce the commercial BTR?

Rinaldo: Yes we can, however the businesses getting those tax decreases would not get them.

Neil: to clarify that number of 134 million, That's not the city's responsibility. that would be the cost of servicing those parts. so the private developer or landowner - it works out 66.000 and acre so the total cost if you had to service all that land immediately.

Powers : Can I ask the impact of the proposal C. Merulla has indicated with all the options with the numbers there. If the number of 9 million shifts to 7 is it possible to sort them out for the impacts and the classes.

Rinaldo: Tax impact on the residential would be a reduction of about .4 - 4 tenths of 1%. the impact on the commercial classes would be increasing there, because in their case take away 2 because the province is matching. it's really 4 for them. That means it'a about a 1.8% impact on the commercial and industrial sector. I haven't done the breakdown of it, but at a high level, that's what it would be.

Collins : I'm glad we dealt with this as after having gone through 6 or 7 budget meetings, I would be very supportive of endorsing the plan as it's been resented if we were serious about cutting things out of the budget to compensate for the 2 million that Mr. Merulla is proposing to take out. the concern that I have is that I didn't campaign on a 6 or 7% tax increase for anyone depending on whether you were in the business community or in the residential sector. Faced with that dilemma I've seen 3 cuts come out of the budget , 2 of which passed by 1 or 2 votes, trying to find that $2 million in another area of the organization I think is almost impossible based on our track record so far. I reluctantly am supporting this today only because I think the numbers that we're proposing under whatever option we're looking at, whether it's 6 or 7% tax increase , I just think is what no one campaigned on. If I asked for a show of hands on that I don't think I'd find one person raise their hand so, that being the case, if we can find millions of dollars in other areas of the organization, I'd be willing to reconsider and look at something along those lines.

Reference was made to past councils in regard to ignoring the business community. The flip side to that coin is that past councils held tax increases to 0- 1 ½%. I'd say we're now in the area of the tax rates that were passed in the 80s., when interest rates were crazy and the economy was growing at a fast pace and inflation was just something that occurred every year in high percentages. In those days we were looking at 9-10% tax increases on an annual basis. That's not the trend. I know other communitites are looking at tax increases , but 6 or 7% is too high for me and I think it's too high for the people that I represent.

That being the case, I'm seconding the motion here based on those arguments.

(C. Ferguson will take the chair.)

Mayor: the issue for me in recommending what staff is supporting is option 3 , which is not the full extent of the BTR that we could implement as per option 1. I balances, not exacerbating the provincial threshold excessively by shifting more money on to the residential class because option 3 allows some relief for the residential class. and yet it brings a couple of key rates down to the provincial threshold which has been the objective of the BTR since we first instituted it, it was to get down to the provincial threshold . And so we are there with multi-residential - we'd be under it in option 1 which we could do. We are there with option 3 in multi-res as we would be in option 2 as well.

With the commercial situation however, option 3 brings us to the provincial threshold. We'd be over it as you can see from the charts, by going into option 2. With the industrial we still have a way to go and that's the area that would have a great deal for us if we could get to the provincial threshold. And large industrial is even more exacerbated than the industrial class. Why is it important? I think we know why it's important, We see every day stories of businesses making decisions to go elsewhere in neighbouring municipalities. I can tell you, even though it hasn't been tracked, as it now will be and C McHattie made an excellent point on that. As late as yesterday I spoke to a group of 5 investors from Great Britain, looking at making considerable investment in the province of Ontario. And Hamilton is one of the sites that they've selected. They like Hamilton - not having to deal with the gridlock in Toronto, they don't have to deal with the land prices we have in Toronto and they asked us how are we in terms of being receptive to business investing in our community. And they talked about taxes. It wasn't the only thing they talked about, It was one of a number of things. I think we need to signal to the larger community with our residential community as well as our business community that we're willing to be fair. This is not about favouritism. This is essentially about fairness. If you consider a provincial threshold to be a fair threshold we're aiming to be there. We're not aiming to be lower. It would be great to be lower, but it wouldn't be practical. So, it's a question of trying to signal to the business community that we want to treat you as fairly as other communities treat those business classes. $1 -2 million may not make an appreciable difference, but the signal we send is extremely important. It will either say - we're willing to be fair or willing to be less than that.

McCarthy : (to Joe R) In the taxation book 1, page 14, we talk about the impact on residential classes based on the phase-in that we started in 2001 and then re-jigged in 2003. It's got Flamborough at 2.2% for this year. If we pass the budget with Option 3 at 6%, then I've got a 2.2% on top of that?

Rinaldo: Once council approves the budget, and more importantly when council approves this, we can start working on the phase-in. The phase-in will change beacuse it's a new re-assessment and we're in the last year of the phase-in. Bit I thought that the impact would be lower than that. I don't believe it will be that significant an impact., but we're still modelling it. But we need council to pass the budget in order to re-calculate the phase in, because we have to do a new calculation.

McCarthy : This is the last year for the phase-in program?

Rinaldo: Correct.

McCarthy : Based on that so there's going to be area rating to re-jig these figures, to sort of smooth them out a little bit or ?

Rinaldo: The way I was preparing the area rating on the same basis as last year, given the limited time we're going to have if council passes the budget next week. we're not going to have time to do a lot of analysis on it - simply pass it on the same basis as last year. So area rating will have a positive impact in Flamborough.

McCarthy :(to Joe) On the business tax reduction program, you've factored in under option 3 the $9millionbut under the potential amendment to $7 million being matched by the province, that still doesn't give us - that still doesn't put us in the direction that we're - in line with what we're trying to achieve? If we go 7 million, we've got 14 million. Des that not accomplish the thresholds?

Rinaldo: We would reach it for the multi-residential class, we wouldn't reach it for the commercial class. We were using the 2 million to try to get us to the threshold for the commercial class, and the advantages you have once you have that, next year you will be able to tax fully both the res. multi-residential and commercial classes. right now the dilemma you have - you can't tax the commercial class as now they've give you a taxing capacity of 50%. That's the advantage you have if you are able to get to the threshold for the commercial class, We need the 2 million to get us to the threshold.

McCarthy : The new legislation that's been passed - in order for us to tax commercial and industrial, we have to actually reduce, so isn't it 6 of one - half dozen of the other then? or?

Rinaldo: That's not correct. New legislation allows us to tax 50% . If the residential rate is 6% you can tax the commercial industrial classes by 3%, as an example That means you will hbe to increase your tax ratio., in order for that to happen. Therefore that will move you away from the threshold. But you do have that flexibility. Under option 2 I showed that you can have that lower impact. If you do that though,. you will be moving away from the threshold as opposed to getting closer to the threshold. The advantage is that if you go to the threshold, next year council has the option of taxing fully the residential , multi-residential and commercial classes , whereas next year you may be restricted by 50% again - or I don't know if that legislation will be applied in 2004 and 5 as well.

McCarthy : Based on that I'm going to be supporting the amendment that has been brought forward today. I appreciate it's not what the business community is looking for but I also appreciate the fact that the residential component is high and everybody's got to come to the plate to deal with this issue. And it's not what we could do under the new legislation in terms of taxation for the business component. I think it's a reasonable compromise.

Ferguson: (to Joe) If we assume we pass option 3 today which puts commercial at the provincial average what would the bottom line be for residential assuming this year, it's going to be 6%. If if we put commercial in the mix, what would the increase be?

Rinaldo: It adds $160 million to our tax base, so it would probably reduce the 6% to something like below 5% or 4 ½%. I haven't done the calculations. Yes, about 4 1/2% instead of 6%. It gives you another $160 million of taxation which allows you to spread your burden on. So instead of only being $300 million of residential class, you've got another $160 million of tax base to help you minimize future tax increases.

Ferguson : How many other municipalities in Ontario participate in BTR?

Rinaldo: Actually, very few. but very few municipalities are restricted like we are . I think Toronto, Hamilton and a few other selected cities are above the thresholds. Everybody else is pretty well there.

Ferguson : Does Toronto participate?

Rinaldo: Toronto has ben trying to participate for the last couple of years. They didn't initially, but I know they were trying to get the province to kick in some money for that part of it as well.

Ferguson : I would suggest that if the province came and said "here's $32million, what can you do with it?, I think we'd just rejoice, and that's in fact what they're doing. In the last 2 or 3 years the province has reduced the taxation by $32million in commercial and industrial. That's ongoing. So next year, it's going to be $41 million the province is putting in this community. I think it's absolutely essential we carry on with this and I'm going to support option 3 as it stands.

Horwath: One question is around the thresholds. When were they established and have they ever changed?

Rinaldo: They were established back in the re-assessment in 1998 and the province has elected not to change them?

Horwath : And even currently the province hasn't changed the threshold?

Rinaldo: the indication I have from the staff is that they are leaving them alone.

Horwath : Can I ask the same question about provincial average. These tools are going to be used by some of these other municipalities there is an assumption that possibly the average will be moving up. So it's quite possible we can do nothing and yet the average is up. Possible? The other municipalities that would affect the average, especially the larger ones can start using soe of those tools and start increasing their taxes

Rinaldo: I have no way of knowing, I don't have the data one way or the other to see whether we're closer or further away from the average. but it's possible.

Bruckler : To reach the threshold for the remaining categories - this is a hypothetical question for the year 2005 - could we reach that threshold in 2005 for the larger industrial and if so, what amount might that be?

Rinaldo: The amounts are (?)insignificant(?) . Because we are so far away, I didn't even calculate them. But we can easily provide you but it would be multi-million dollars that we'd have to kick in.

Bruckler : If we went with the 9 million this year, we'd only be looking at based on this looking at the large industrial is what we'd be working towards in subsequent years.

Rinaldo: It actually gets us closer to it even with the 9 million , but under option 3 which is what we're recommending were still pretty far away on the small industrial and the large industrial - on both of them - so we still have a ways to go. I just haven't calculated it.

My understanding is it's fairly significant the dollars we'd have. It's not 1 or 2 million - it's multi-million dollars.

Bruckler : Option 3 shows 6% for residential. Is that before some of the extra size that we've gone through now, so we wouldn't be looking at 6%. we'd be looking at something other based on the calculations that we've gone through?

Rinaldo: It was based on the March 12 report. We will make those adjustments as soon as council passes the budget. There will be minor adjustments The 6% will be something like 5.8

Bruckler : it's been pointed out that we've already substantially invested in this particular program. I think we are moving in the right direction so because we have made that investment I would hate to see us pull back at this point in time. and perhaps hurt the future growth in this community. So I would also support the recommendation.

Whitehead : On the residential taxes, we talked about thresholds, we talked about average. Where is the residential taxes relative to provincial average or threshold?

Rinaldo: The thresholds are really a function of multiplying the number of times the tax rate for the large industrial was greater than the residential. That's what thresholds mean, e.g. the 3.91 means that the large industrial tax rate under option 3 is 3.9 times greater than the residential. That's how thresholds are calculated. We have done in the past comparison of what our residential tax rates are with other communities , but we haven't done it recently.. We know we're a lot closer in those areas when you compare that part of it, we can certainly provide it. that's where we'd have to do a comparison of our residential tax rates as compared to other similar communities. But they wouldn't be through thresholds because thresholds are a function of what it is greater than it is greater than the residential tax rate

Whitehead: It is my understanding that we probably are residentially the highest taxed community in all Ontario. Is that correct?

Rinaldo: I'd have to review that. I couldn't tell you whether that's true or not.

Mayor: We've had that discussion here before. The whole reason for asking the social services to be addressed is exactly that - that the social services cost is driving our residential taxes through the roof. That's part of the equation as well.

Whitehead. I understand and appreciate that during the election I did talk about the fact that we need to expand our tax base. ?....? Since this program has come in place, the residential taxes are well above a lot of municipalities across Ontario. So we look to a different line of questionin, the question is going to be. Since this program has come in place, what kinds of activity on these front - what has the trend been in these categories since we've instituted ?...?

Rinaldo: We've provided that. We've shown you a few indicators in the presentation.If you look at the assessment growth (slide 4) in my presentation Supplementary taxes from commercial and industrial shows the trend that we've seen in there and we have other charts that show billing permit activity For commercial/ industrial, it shows the trends since we started the BTR.

Whitehead : Can you give me a quick summary . What are the results. What are the results of the BTR even if it's anecdotal.

Rinaldo: We're seeing that we're being very compin terms of commercial We're seeing some significant improvement in terms of our average tax rtatefor commercial class . Our large industrial is now comparable or very close to being comparable, but our small industrial is still being out of whack . Their assessment values have increased at a faster rate than other commercial properties. We are making strides but we're still a bit higher than other communities as Mr. Everson mentioned earlier. We are about $.70s higher per square foot than other surrounding communities

Whithead : I'm trying to establish whether or not through this program we are in fact expanded our tax base?

Rinaldo: We have. There's the amount of annualized taxes that we generated through new businesses. It's about 2 ½ million in 2001, 3.3 million, 1.9 million for those 3 years - 7.7.

So that 's what we've increased on average on an annualized basis from new businesses.

Whitehead: I do have some concerns relative to the pressures on a lot of our constituents. relative to their ability to pay We have to move sooner rather than later relative to mitigating taxes on our residents. One of the ways we do that is to expand the tax base. It's case where if you do one thing you have a negative impact on the other so I commend the process relative to the BTR. I see assessment growth and we need that. I think at the end of the day we can bring the commercial/industrial taxes to a level that we get a lot more activity. The activity itself will sort of expand the tax base therefore alleviate the residential tax payer. . I'm not looking for a short term fix - I'm looking for a long term fix. I think I've spelled out where I'm going.

Mayor: Can I correct what I said earlier. I didn't want to leave the impression that social services are driving our taxes up. It's we don't have a pooling arrangement that is exacerbating the situation.

Braden: Is it that we're aiming at the threshold so that once we reach that level ...

( end of tape B )...

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

April 21, 2004 COW Budget . Tape Side C

Braden :... find that money and see if I can make that work

(?static, voices off mike about correspondence?)

Mayor: (?)community initiative .

Councillors don't have that correspondence here, I'll ask if Joanne to remind us of what Mr. Tinglin did request, ask or ? and then we'll deal with it.

Joanne: He asked for 2 or 3 things. That we continue our support for the access and equity (?acuity?) office, that we continue our support to the initiative through the continuation of the secondment of the project manager from my department and they would like to make quarterly reports to the strategic budgets and planning committee about their ongoing activities

Mayor: Do any of those requests need to be reflected in the budget? Are they in the budget?

Joanne : None of those are budget requests. The city manager and I will work together to draft some correspondence back to strengthen(?) Hamilton to confirm that we will support the secondment

Mayor: Can I have a motion that we simply refer the correspondence from Mr. Tinglin to city manager and Joanne?

moved Merulla 2Jackson. Carried.

Collins : On the corporate communications budget I would like to move that the 2000 operating budget - the actuals not the re-stated .. I need to ask a question on the actuals versus the re-stated. The actuals were the numbers that councils passed as the dollar allotment for the department, any department to use during the 2003 calendar year. The re-stated number represents what?

Tom: There's a number of reasons why the re-statements could occur. There may have been shifting of bodies between departments . But essentially whenever we do a re-statement it balances out to the total. We report on the re-statements during the hearings. When we have been re-structuring that represents a movement of base budget dollars The base budget doesn't increase with the re-stated globally the global budget is set and with in that staff make changes that would make some budgets higher and other budgets lower. The dollar amount in regard to levy dollars collected remains constant. The levy remains at $495 million.

Collins : I would move at the appropriate time that we freeze the corporate communications budget at the 2003 actuals which would be a savings of $58,000. It's just doing away with the 5 or 6% increase So holding the line on that budget and I think the increase - the issues that were brought forward were salaries and wages . I would ask that that budget be held at zero . I believe 2004 versus the 03 actuals were 58,000. I stand to be corrected on that .

Mr. Peace : If we hold it at 2003 it will result a reduction of 1 FT (?) and we have a report that is is before council .

Mayor: And this is a department that has already been severely, severely reduced.

Merulla : My concern regarding the communications budget is the actual mandate. From your perspective I understand why you have a media person. I have some difficulty with the staff of the bureaucracy having a prepared statement with regard to any initiative the city brings forward, because I think it takes away from the openness and transparency of a lot of our initiatives. Can I get a clarification on why we need a corporate communications budget at all, aside from your office?

Mr. Gogsnatch (?): Corporate communications does significantly more than media relations. We're involved in issues in crisis management . We help client depts. craft their messages whether it's oral or written . We are an internal consulting agency if you will . We buy media , we place advertising We train staff in terms of communications initiatives. Last fall we did a series of seminars . We're significantly more than media relations personnel.

Merulla: How exactly is this measured, from a corporate perspective? How is it measured - the effectiveness of the entire program?

Gogsnatch: We at the beginning of every year sit down with our client depts. We have officers assigned to specific depts. to provide support. We sit down with the dept. heads and establish service deliverables. At the end of the year, we sit down again with the dept. heads and assure that have received the service that they asked us to provide. To date we have provided a satisfactory level of service.

Merulla: How did we function in the city prior to having a corporate communications division?

Gogsnatch: In 1998, the former regional municipality of H-W hired a consultant to do an analysis - to do a study on communications effectiveness. At that time that consultant identified 23 people throughout the organization that were doing communications work. The consultant identified that because it wasn't unified, that there was a great deal of waste in terms of money expenditures and also in messaging. In 1999 regional council undertook to form a corporate communication dept. At that time there was a manager and 5 communications officers. In 1999 the combined former region of H-W and the city of Hamilton were spending $3million per annum on advertising and communications materials. In 2002 the actual number was something in the order of $2.4 million. So, in terms of corporate communications being effective we've reduced 3 amalgamation costs from 3 million to post amalgamation costs of 2.4 million and we've consolidated our corporate image . We've created a new logo for the new city We are the central bureau in terms of information that is disseminated either internally or externally. I think that the municipality has received good value for its money.

Merulla: re clarification on the logo. The cost was about $600,000 for that logo and I believe an RFD (?) process with respect to the work being done on a contract basis as opposed to internal.I wonder what role corporate communication had when we hired somebody to do that.

Gogsnatch: The firm was hired to work on branding - the logo being just one component. The design and implementation of the logo was something in the area of $30,000. 600,000 was the budget allocated for production of the logo, implementation of the logo , collateral material - we put out a coast to coast launch piece through the Globe& Mail , We did TV, radio , what have you, so 600,000 wasn't specifically the logo. The role corporate communication played during this branding event was as the lead agency . There were reps from various depts. on this selection committee - the mayor and certain members of council, so we were the lead internal group that were co-ordinating it making sure the contractor was doing what the contractor was supposed to do.

Merulla ; (?) with respect to the $600,000 expenditure - the branding, the logo- it was supposed to be an initiative that increases the awareness for the city of Hamilton , places of business and attract new business . How have you measured that $600,000 expenditure?

Gogsnatch: We didn't undertake a study . As a cost saving measure there was $40,000 from the 600,000 allocated as a post-launch study, which at the time was decided not to be spent . So 40,000 was saved. So we don't have quantitative information, but qualitatively we receive input that our message did get out there - it was received and our renewed image was in fact understood. In terms of the economic benefit, I don't have that information.

Merulla: With respect to renewed image, how many periodicals or TV stations aired either the videotape or how many newspapers actually printed a story related to that renewal or the renaissance of Hamilton?

Gognsnatch: As part of the process we had a firm in Toronto do media monitoring for us. It identified about 4 dozen I think - 4 dozen media across Canada and that was radio, newspaper etc.

Merulla . So 48 out of a potential..?

Gogsnatch: 48 mentions in different media at the time of the launch.

Merulla : Potentially, how many exist?

Gogsnatch: Across Canada - hundreds. If we're thinking about every media, there's got to be thousands- trade journals, local newspapers, what have you. In terms of major media , 48 mentions across Canada is pretty significant.

Merulla : If we had contacted those 48 , would it have cost us $60,000 to get that message across in those particular ...

Mayor: I've going to interrupt. That's history. That was a program that was expended, that we went through . We're dealing with now a recommendation about keeping the budget at status quo.

Merulla : I'm a little concerned right now, because I tried to cut $2million from the BTRand that failed. I don't see any other cuts coming forward. I only see ?...? to reinforce the budget . Based on the $2million we haven't saved today, I'm prepared to eliminate the entire corporate communications budget and move on that and just keep a corp. comm. person in your office.

We just keep spinning our wheels, and I didn't ask for the BTR to be eliminated, although there's tangible proof to believe that it should be . I simply wanted to move incrementally ...

Mayor: We've had that debate. Let's deal with C. Collins recommendation and we'll take it from there.

Merulla : That was the motion I was bringing forward

Mayor: But we have one already

Jackson: What would that cut represent actually, if we were to eliminate everyone but one?

Mayor: We'll come back to that. We'll have staff tell us what the corporate communications budget is

Jackson : I'm confused . There's a 5.6% increase in corporate communication. C.Collins asked is that salary increases, everything and I've been told that if we eliminate that, that's a body that we're eliminating . We can't have it both ways, Is it a part of salary , wages and increases or is it an actual body?

No name (Glen? Gogsnatch?): The issue is actual dollars and if you reduce the actual dollars from 538 to 508 it's $29,460. What that equates to is inability to deliver the service and so it likely would result in the reduction of one FTE

Jackson : Is that an elimination of a position ? $29,000? Even though the 2003 approved budget was $479,000 and the request in 2004 is 538 which would mean about a $58,000 difference. Was a condition added during the course of the year?

Glen: there wasn't a position added. In fact we cut the communication in half from 9 to 5 in 2003 so we're half what we were. What the director's indicating to me is that the only place they can find that $29,460 would be through staffing costs

Jackson : So that doesn't mean any increase in wages or benefits? That's going to be a position.

Glen: The increase is related to increase in benefits , increase in economic adjustments, Mr Peace is saying is you want to reduce that $29,000, you can only do it through staff, because that's all he's got left in this budget. The increase was not generated by adding additional staff. It was generated by increase in ?omers? and so forth , the same type of increases that most depts. are incurring.

Jackson : So there's no holding the line then on the existing employees and their wages and benefits in that dept? There's no holding the line to eliminate that 5.8% increase?

Glen: C. Collins is requesting - just hold the line. Keep the bodies but hold the line on wages and benefits in that area to the 2003 level.

Glen: my understanding is that the $29,460 would not be able to be found within this dept. unless they reduce staff costs.

Mayor: The suggestions was to keep the status quo on the budget by not increasing wages or omer's contributions

Jackson : I wanted to freeze the line item from 03 to 04. So - 03 we passed 479,540 . I want that same budge for this dept. in 2004 which is about 58,000 in total It was re-stated during th eyear to give it 420,000 more in this area . This is one of those area that it was contributed to the deficit . We cut it by 50% , but 100% of the dollars were spent That's problematic for me. and that's why I've asked for a freeze on the dept. budget for this year.

Mayor: We can't combine 2 motions because they are very different from each other.

Bruckler: I understand we can't talk about 2 motions at the same time. I think we certainly want a community that's unique and I don't want to be known as a unique community that has no communication department - for a municipality of half a million people . This dept. has had a substantial reduction. Did I see a comparison with other municipalities? Could Mr.Gogsnatch let us know where we stand with other communities with respect to communications budgets and so on?

Gogsnatch: A recent survey we conducted of similar sized municipalities indicates that the average size is 9 FTEs, and currently we're at 5.

Horwath : My question was answered about why it becomes a person in terms of the benefits . It's around that issue of OMERS and the pressures that all of the depts. are having and I still don't have the answer to that question about - are the OMERS increases being offset by the budget - dept. by dept. by reductions in workers com, unemployment insurance and all those other government types of dollars that are being spent. That did happen in our budgets. there is an offset, so whatever the OMERS increase was, it just added on by a reduced amount because some of these other contributions are coming down.

Mayor: I think we tried once before ...

Gogsnatch. I have the information. I tried to explain what the differences are between the legislative budget and I was going to try to meet with you and I'll be sending a memo to council explaining it now I understand what the clear question is. It will explain the difference between the departmental changes - how the benefits were dealt with in departmental changes .

Horwath : I'd prefer something in writing so that I can get an understanding on how they are being dealt with.

McCarthy: I'm going to be supporting C. Collin's motion. The bigger questions that I want explained to me. We're currently in negotiations over wages . How does that factor into a budget really when we don't know what those % increases are going to be? We're in negotiations with the unions and we're looking at $36,000 worth of budget pressure increases. C. Collins motions speaks to that in part, but how do we factor that in when we're coming to the end of a budget and we don't know how that's going to affect our budget.

Mayor: We do factor it in. I don't know whether this needs to be in camera. I look to Catherine for some direction on that.

Catherine: In prior years there is an allocation made or assumptions made about what the likely cost of those settlements is . The allocation is made in the budget. If we're going to go beyond that in terms of specifics, we would be into an 'in camera' discussion.

Mayor: Every year we say this is where we'll be and that is what we'll put in the budget and then hope for the best

Catherine: My concern is that we are not keeping pace . Listening to what a receptionist is making downstairs and it's equivalent to what we're making around the table here . We're going to have to get a handle on things like that. It's not keeping pace with cost of living. You wouldn't get that salary in the private sector and it makes no sense to the general public and it makes no sense to me. I understand the pressures from the unions are huge, and more so arbitration is a very delicate balance, but I think there';s got to be more discussion around the table on this issue. It's almost becoming an acceptable factor here that we are going to allow those kinds of increases to go unencumbered and unheeded . That's not the impression this council wants to give. I'd like to set some time aside on this issue. If we have to come up with a policy that says we're going o keep pace with the cost of living increases and nothing more than that. The figures that have been factored into this budget are exorbitant for staff increases. Council has to deal with this, We just can't keep accepting these figures on a yearly basis.

Mr. Peace: That dollars wasn't just salary. It was all-inclusive - wages, benefits . I would say it's very comparable to both private and public sector.

Mayor: We have a motion to reduce $29,000 - $58.000 from. corporate communications to bring it down to the 03 level. -moved Collins, 2nd - Merulla. All in favour? I think that failed. Let's take that count again, It fails. 7 to 6 is what I got.

C. Merulla has a motion to eliminate $530,000 from the budget 2nd by Collins

Merulla : Does that 530,000 include facilities and support staff?

Mayor: No, that's staff. Is it?

Mr. Peace (?): The entire budget includes salaries, benefits, office supplies , equipment - everything it takes to run the operation.

Merulla : Including the facilities? ( static ) . If you incorporate the facilities cost, what will that bring it up to ?

Mr. Peace: It would be charged - be part of city Hall cost. We can't do that because in the past we've charged depts. to determine what the actual cost of operating is and suddenly we're turning... Did we not go through this exercise before where' we're talking about how cost of running depts. including facilities on an activity-based cost...?

Mayor: We might have. I need a clear recommendation from you

Mr. Peace: I don't know what the clear number is though.

Mayor: The clear number is $138,000

Mr. Peace. No - that doesn't include facilities.

Mr. Peace(?): So everyone is clear on facility cost. Depts are charged for any lease base or in various program such as public works pay for yard space and all those sort of things. . Corporate bldgs. such as city hall , Flam. town hall old Stoney Creek city hall and so on are not charged out to the various depts. They are within the bottom line budget within facilities , so they have a bottom line budgeted at the end of the day. Those charge are not charged out. Anybody in city hall for example doesn't pay for floor space in city hall as part of their program.

Adjourned Moved Jackson, 2nd ferguson

Mayor: He's moving the legislative budget as amended.

(background voices not on mike )

On page 321 where you see employee-related costs have gone up $100,000, that we actually dropped that budget by the same amount of money but not necessarily take it specifically out of salaries. If our budgets are up 165,000 that we reduce that budget by $100,000- you get the 100,000 number nominally from the top ...

Mayor: so that's a 100,000 reduction?

Mr. Peace: Yep. And we don't say where it comes from and I guarantee to co-operate with as many...

background voices off mike Something carries. A long section voices off mike

Mayor: Moved Mitchell. 2nd Pearson.

(end of Tape C)