January 27/04 Report
9:30 am

Only one item on the agenda: Budget presentations.

I arrived late at 10:10 am.
At that time the following councillors were present:

Merulla
McHattie
Morelli
Horwath
Jackson
Kelly absent when I arrived at 10:10, did not appear after that.
DiIanni absent when I arrived at 10:10, did not appear after that.
There were no non-member councillors in attendance
Quorum was lost from 11:33 to 11:55 when only Horwath, McHattie and Morelli were present.

7.1 Staff presentation on the budget. (Dr. Elizabeth Richardson)
Last year they eliminated public health presentations to schools, so now looking at providing something online. Key focus this year is promotion of physical activity, and reduction of tobacco use.
"We currently manage 6200 housing units" (social housing). City administers provincial program providing rent supplements to landlords of low income tenants. In 2002 used $800,000 for 400 units. Hoping to increase by 100 units. Expect to have "more holistic approach to housing and homelessness".
$13 million in federal HRDC funding for Skippy Two on prevention of homelessness.
"2003 is a year of getting our fiscal house in order" - realignment between divisions, "improved costing to better reflect actual costs and the revenues generated"
Increase of 11.4 million (8.2% increase). Horwath raises issues of not including actual budget of 2003 but only the restated version of this. While Rinaldo pointed out that the 2003 approved column appears in the budget books, in fact the comparisons provided are between the "restated 2003" and proposed 2004, not between approved 2003 and proposed 2004

Jackson asks is this a sustaining budget - response: this is a maintenance budget, any reductions will mean reduced programs.
Jackson also wants division between mandated and non-mandated, as well as discussion about whether we have to respect mandated
Unrealizable revenues of culture and recreation $1,174,000 "which represent a decrease in revenues due to an increase in fees as well as about $500,000 in unrealizable revenues".

Horwath questions on $2.685 million increase in Facilities and Fleet cost allocations (internal charge back system) - mainly related to utility increases, and largest part is culture and recreation. Get access to subsidies by charging them to OW. Horwath: 'why so high'? Rinaldo: "the whole area of facilities has been quite frankly underfunded in the past and we're in the process of trying to review that whole area to see if we can rationalize". Some increases in rent. Promises fuller explanation.

Jackson: who does facilities report to? Rinaldo: public works. Jackson: problems in doing this because it affects other committees.

McHattie: ask for explanation of unrealizable Culture and Recreation revenues. Fenwick "made up of more accurately looking at what budget what programs are actually bringing in what revenues. There's some unrealizable revenues with regard to about $500,000 in corporate revenues that were a pressure from previous years that were eliminating this year". "There was a situation in arenas where they did not include the GST which was an error that was picked up after the budget went to council. $385,000". The rest is made up of passes, administration fees, aquatic fees, that are more reflective of what we're actually taking in so that we don't have this in the future, that we don't have these unrealizable revenues, that we're actually coming in at what we said we were". Also some unrealized were offset especially in world events category.

McHattie: $500,000? Fenwick: "what happened in the past there were some revenues that we're unrealized in past years and they were put into the budget but they were never realized as a revenue and so we had to eliminate those, in other words they were budget… I'm going to call them amounts that were put in the budget that weren't realistic. They never could be realized. They were far too high, than what you could realize and that created a pressure thorughout the corporation, so this is the year that we said we can't have that any longer. In fact, the 2003 budget was determined on what we actually could take in, and this is the differential put back in the budget. It has to be seen someplace and this is the year that it's seen and maybe Mr. Rinaldo could speak further on it if I've muddied the waters." Rinaldo: "What we tried to do this year, Mr. Chairman, we had a number of areas where the revenues were overestimated significantly and we tried to correct both on the revenue side and on the spending side and develop realistic budgets for these revenues as well as we knew that there were some areas of expenditure we were overbudgeting for. So we wanted realistic budgets in all departments. Unfortunately in the past those were embedded in the budgets and they were never really corrected before. They should have been corrected, quite frankly, years ago, and we're finally correcting them to reflect more realistically what we anticipate as revenues and what we anticipate as spending for various programs."

Morelli supports Horwath concern about lack of 2003 approved budget data. Wants connection between qualitative description and actual cost. Also raises that "health section" is "least aggressive" in dealing with problem houses in downtown. Richardson: need to ensure we don't exceed our legislated powers.

Ontario Works: Total cost is $72 million. Benefits are $24 million. Downloaded costs account for $39.8 million or 55% of total costs. "Those are costs over which we have no control".

Restructing savings of $404,400. Loss of eight jobs. Note that "Employment and Income Support" lost three positions and lowered City costs by only $90,620, but resulted in loss of twice that amount in provincial subsidy. Gross reduction $278,720, but only net reduction of $90,620.

Net saving of $112,000 in 2004 because of budgetted decrease in caseload from 11,170 in 2003 to 10,820 in 2004. Horwath: where is reduction coming from? Are we going to pressure people off the system and onto the streets? Richardson: actually predicting 3% increase above average caseloads because of CAMCO closures. Most of province predicting 0%. Caseloads dropped more than expected in 2003.

Jackson asked about "enhancements" - mandated or not? Dust-up over inclusion of emergency beds increase which was already approved last July so why listed as enhancement? Rinaldo says in past they've called this a "pre-approved by Council" item and says "perhaps that might be better".

"Shelters are at overflow stage". "Later in the fall we hit a point where we are not going over".

Horwath notes that 80% of cost of operating emergency beds is paid by province, and actually 'construction' of beds was with federal monies. So the $328,000 is just the City share. Horwath: what about the family beds. Appears they haven't been included, although they were approved.

McHattie: Is there a place in the budget that summarizes cost increases in 2004 as a result of mandated provincial action. Rinaldo notes that half of safe drinking water changes are provincial, so $79K is just City share. Morelli wants to know what would happen if we said we weren't going to do mandated programs where there is no provincial contribution.

Savings of $180K because of lower mortgage rates in social housing, increase in $473K in more rents. Also charge back to municipal non-profit housing providers of $228.5K

Consulting contracts: presented in "net" dollars to total of $71,950. $20K for Hamilton sports plan. "We use consulting dollars either when we want an objective third party opinion…., when we don't have the expertise… we don't want to hire an entemologist for west nile… or when the issue is very time sensitive."
McHattie gets response: "all of these are net dollars" "Overall gross budget is $116.9K"

Contractual is $3.5 million NET! Gross is much higher at least double on most lines with the province paying the rest in most cases. Gross amounts are:

• $190K office equipment lease/rental
• $280K rent for office buildings
• $254K cellphone rentals
• $396K for advertising and promotion ($188K for culture and rec)
• $227K for culture and recreation publications minus $100K revenues
• $374K for hardware lease/maintenance
• $207K in incentives for OW employers (Merulla asks about net benefit of getting people off OW) 80% paid by province.
• $10 million child care fee subsidy payments to providers
• $165K for culture and rec special events, museum cleaning, instructors
• $265K for Macassa and Wentworth lodges

Capital budget - only affordable under option D. Includes heating and air conditioning system for Red Hill Family Centre to meet requirements under Occupational Health and Safety Act and meet needs of children. Macassa lodge software for scheduling 500 employees. Improvement of west nile lab. Bridgewater Development ($500K) is a housing development City and Habitat for Humanity partnership.

Budget risks: No money included for west nile adulticiding, SARS, avian influenza, increase in OW caseload., mortgage rate increases. Also child care costs could increase to offset waiting list - Ministry has increased subsidy available but Hamilton hasn't taken it yet.

Horwath on mortgage rates: "For several years running, the mortgage savings that have accrued from social housing have been used to offset budget pressures for our municipality. We've never taken any of that money to set it aside for capital repairs, set it aside for new housing, which other communities are doing. And so it's a budget risk for the future, but we need to remember that this City has used those mortgage savings in the past, which should have been set aside for future budget risks or that could have been used for more affordable housing, as a way to offset levy pressures." "We've never been able to do, what in fact the transition board recommended that we do, which was to set aside at least 50% and ideally 100% of any mortgage savings for future investment in affordable housing". Should be setting policies to do this, "so that we can partner with the provincial government, the federal government when they're starting to offer new affordable housing programs and also to help us deal with the longer term issues of replacement of reserves and maintenance."

Horwath: question about cellphone and parking costs. Where are these disappearing from? Richardson: "Part of going in and taking a more realistic view of the budget was to review those costs where there was insufficient base and there was insufficent base in parking and cellphones. Previously those pressures were just being cash flowed from year to year, so now we've built them into the budget."

McHattie: $900,000 decrease in revenue from recoveries of fraud and overpayments? Response: estimated in past. Reflected here are the "actuals" rather than estimates. McHattie: does this mean there isn't as much fraud as Harris suggested? Yes, not as high as expected and we also overestimated revenues without prior experience.

Housing - no increase in levy partly because of reduced mortgage payments.

McHattie - cuts to social services can affect other costs, eg ambulance costs noted in Spectator. Can you comment on linkages? Focus of our council is economic development and I think a lot of what goes on in social services relates to that. But people with no money can't contribute to economic development. Richardson: Good points raised by councillor. EG impact of cutting residential care facilities beds on both community and other city budgets such as community hostels, OW rates, etc. Social development strategy looks at these issues and is there to recognize that community economic development is dependent on quality of life and quality of services in the community. McHattie: would benefit council to see some of these linkages, we may be saving money in one area but causing huge costs in another area.

Horwath: It's interesting because the same issue comes up in every budget cycle. We actually do, some of us anyways, raise those issues constantly, and I don't know whether we have corporately or council has those things as a big factor in the vision for our community. But I do know that Jo-Anne Priel has said that when the Caledon Institute did the research that developed the Social Development Strategy, one of her phrases was that this work is the glue that holds our community together, and without the glue we're not going to have an economy, we're not going to have the investment, we're not going to have anything, because quite frankly, the things that were discussed at the meeting is exactly the glue that holds the community together."

McHattie: Also image of Hamilton, and trying to improve that, and the more people on the street, not being able to participate in Hamilton civic life is going to affect our image.

February 13 opportunity for input into budget by community groups. Same group as was brought together in 2003.