City Budget
Budget 101
Budget dollars at work
The City Budget is like a roadmap that outlines our community’s priorities. Each year, Council decides how money should be used to fund city services, programs and infrastructure. It ensures the city can continue to deliver seventy programs and services to residents today and also plan for future needs, while balancing affordability and tax competitiveness.
How the budget process works
Following the Mayor’s direction, the City has simplified the budget process. Beginning this year, Council is presented with two budgets being a combined water, wastewater and stormwater operating and capital proposed budget funded by rates and a combined tax operating and capital proposed budget funded by property taxes. This makes it easier to understand how a capital project impacts the overall operating budget. Previously, tax supported operating and tax supported capital budgets were presented separately.
Each department presents their portion of the tax budget to Council.
During this process, Councillors can ask questions and seek clarification from staff. Public delegations appear before Council as well.
Presentations are also held to focus on budgets submitted from related boards, agencies and committees requiring Council approval. This includes Hamilton Police Service, Hamilton Public Library, various conservation authorities, and volunteer sub-committees.
Maintaining accountability and transparency throughout the budget
City council meetings are accessible to the public. Budget documents and presentations are available on the City’s website. During the year, the City submits reports to Council outlining differences in spending and revenue compared to amounts that were planned in the budget including new investments not in the budget.
Independent auditors review and comment on the annual financial statements prepared by management. Additionally, an annual financial information return (FIR) is submitted to the Ministry of Municipal Affairs. The FIR is a legislative data collection tool of financial and statistical information that can be used to compare municipalities.
The City of Hamilton’s budget helps to advance Council's Strategic Priorities – sustainable economic and ecological development, safe and thriving neighbourhoods and responsiveness and transparency. Staff closely monitor and report key metrics on visual dashboards, updating Council and the community on progress and performance. All of these pieces come together to support the City’s strategic plan.
City Budget
Frequently Asked Questions
A Municipal Budget is a plan for how dollars are used, invested or earned over a given time period. It is also a policy and planning document that outlines the City’s priorities. Decisions made as part of budget development help determine funding for the programs and services that maintain resident’s quality of life.
For every dollar the City spends:
- 50% comes from property taxes
- 22% comes from Grant & Subsidies
- 12% comes for Rate Revenue (water, wastewater and stormwater)
- 12% comes from User Fees
- 4% comes from Reserves
There are three main components to the City’s annual budget:
- The Tax Supported Operating budget: The tax supported operating budget is a plan for the day-to-day operations at the City of Hamilton, including employee salaries, materials and supplies, contractual services and financing of capital projects.
The tax supported operating budget is largely funded by property tax dollars and user fees, which include charges for recreation programs, transit, infractions, permits and licensing.
- The Tax Supported Capital budget: The tax supported capital budget is the long-term plan for the construction or purchase and financing of the City’s capital assets. Examples of capital assets include infrastructure, land, buildings, machinery and equipment.
Forms of funding include grants, development charges, gas tax, reserves debt and contributions from the operating budget.
- Rate Supported Operating and Capital Budget: The rate supported operating budget is the annual plan for the day-to-day operations of the City’s services and financing of capital projects supported from water, wastewater and stormwater user rates.
The Rate Supported Capital Budget is a long-term plan for the purchase or construction and financing of water, waste water and stormwater capital assets.
Forms of funding include grants, development charges, debt, reserves and contributions from the operating budget.
Ontario legislation states that municipalities must have a balanced budget. Under legislation, municipalities cannot finance operations with debt.
Reserves and reserve funds are similar to a savings account where funds are set aside for future capital needs.
The City’s reserves can be broken down into two categories:
Non-Obligatory (Discretionary): Non-Obligatory reserves are based on Council direction and are used to finance future expenditures designated by Council. They are comprised of the tax supported and rate supported reserves and the Hamilton Future Fund.
Obligatory: Obligatory reserves are funds that are required by the province to be segregated for a specific purpose. They are comprised of development charge reserves, federal & provincial gas reserves, parkland dedication reserves and building permit reserves.
Federal gas tax reserves are available to support local infrastructure priorities in specific project categories.
Provincial gas tax reserves are used to fund public transit infrastructure and operations.
The City’s current credit rating from Standard and Poors Global Ratings in October 2020 is AA+ with stable outlook. The rating agency expects that during the COVID-19 pandemic and recovery, the City of Hamilton’s creditworthiness is supported by higher levels of government and prudent financial management. Hamilton’s recovery is aided by our economic diversification. Fiscal performance is expected to be resilient due to pandemic-related restrictions and mitigation measures. S&P Global Ratings mention the City’s strong management, strong fiscal performance, low debt and high liquidity as key rating strengths supporting its ‘AA+’ rating.
Governed by the Municipal Act, the City of Hamilton has the ability to invest surplus funds not immediately required for its purposes in Short & Long-Term Investments. For example, the City invests money in the reserves fund until it is required for future obligations.
The primary objectives for all City investment activities are to ensure the safety of principal, maintain adequate liquidity to meet the City’s cash needs, and to earn investment income.
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