Craig's Current - 2025 Budget Edition

Hello, Residents of Ward 12,

Welcome to the 2025 Budget edition of Craig’s Current. The City’s operating and capital budget was finalized in February 2025, and I’m happy to bring you the highlights, which condense many hours of meetings into a much shorter (but still rather long) summary.  

I start with a short overview that covers some high-level points, a summary of the budget process, the elements that make up the 5.6% property tax increase for 2025, the steps Council is taking to reduce tax increases in 2026 and beyond, and a short bullet point summary of budget highlights. If you have only a few minutes, this first section is for you. 

If you want to dig deeper, the next section will go into more detail on each major segment of the budget: City Services, Capital Investments, Police & 911 Modernization, Provincial Impacts and Legislated Services, and Housing and Homelessness Funding. 

Following that, I share some highlights of 2025 capital projects in Ward 12 and also address some of the criticisms that have been made of this year’s budget process. 

Finally, if you want to dive even deeper, I’ve provided you with links to the video and slide presentation of our January 23, 2025, budget meeting. Although the material presented is not the final budget (there were only small changes in later meetings), General Manager Mike Zegarac provides an excellent overview.

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Key points about the 2025 Operating & Capital Budget: 

• There was a new process for the 2025 Budget due to the Province’s legislation granting Hamilton Strong Mayor Powers, making this the Mayor’s Budget 

• With the 2025 budget, Council was confronted with several large financial pressures: 

  -Housing and Homelessness 

  -Provincial downloading 

  -Impact of global inflation 

  -Recovery from the cybersecurity incident that had – and continues to have – very material implications for City operations and the investment required to modernize the City’s IT infrastructure 

• 2025 is the third year of increased and necessary ‘state of good repair’ investments in our capital assets like roads, bridges, recreation centres, sewer and water pipes. 

• The approved property tax increase of 5.6% covers core services and infrastructure investment. 

• Council has directed Staff to: 

  -Investigate opportunities to limit the 2026 property tax increase to the consumer price index (commonly referred to as the ‘inflation rate’). 

  -Undergo a multi-year efficiency review of City operations to improve value for taxpayers. 

On February 19, 2025, the Mayor issued a notice indicating the 2025 operating and capital budget was complete. This year’s process was a departure from the past as Strong Mayor legislation required Mayor Horwath to own the budget, removing the rest of Council from the final approval decision. However, Ward Councillors still retained an important role in shaping the budget, and while the Mayor had the ability to veto any amendments made by Council, she elected not to. On February 19, she confirmed her acceptance of the budget that Council had deliberated, foregoing her veto power.  

The average property tax increase for 2025 is 5.6%, broken down as follows: 

The Mayor’s Directive to Staff when preparing the budget - and subsequently Council’s review and amendments - was focused on the need to balance a) affordability for taxpayers, b) the urgent need for investment in our deteriorating City infrastructure, c) the ongoing downloading of costs from the Province in multiple ways, including a diminishing proportion of funding from them to respond to the housing crisis.  

All of Council recognizes that property tax increases are a strain on Hamiltonians, and that’s why there was so much effort to balance affordability with the work that we need to do to ensure we are building a better future for our City. We had to wrestle with increasing labour costs, a non-housing construction price index increase of 26.1% in just three years (double that of the consumer price index of 13.1% for the same time period), and a lack of the necessary financial support from upper levels of government.  

ACTION TO REDUCE FUTURE TAX INCREASES 

Looking forward to future budgets, Council is taking two directions to address affordability. The first action is a hard look at what options are available to limit increases for the 2026 budget. The second is to do a more holistic review of City operations to find efficiencies and improve service. Allow me to explain each of these in more detail. 

How could we limit the 2026 property tax increase to the inflation rate? 

I was very happy to support the motion that directs Staff to review ways to limit the 2026 tax increase to consumer price inflation levels (2.55% was the number in the motion). This does not mean that the increase must be limited to that level, but that staff will outline what levers are available to Council and what the impacts might be. Two examples that come to mind would be:  

a) successfully lobbying to upper levels of government for significant funding in areas like large infrastructure projects or Housing. As I have mentioned many times, the Province taking ownership of the Housing and Homelessness crisis (which is their responsibility) would be transformational for Hamilton’s taxpayers. 

b) Although not necessarily desirable, Staff may be able to propose possible reductions in service levels for some of the more than 70 services that residents and businesses count on the City to provide (e.g., garbage collection, recreation centres, public parks, road maintenance, etc). 

Action to make City operations more efficient and cost-effective. 

Council has also directed the City Manager to conduct a thorough review of City operations to assess city procedures and identify areas that can be improved to be more efficient and/or effective. There is a broad consensus from the public, Council, and Staff, that the opportunities for improvement are significant. This work will start in 2026. 

A BULLET POINT SUMMARY OF THE 2025 BUDGET 

THE 2025 OPERATING AND CAPITAL BUDGET 

The average property tax increase for 2025 is 5.6%. That was achieved after roughly $59M (equivalent to 4.5% of the total levy) was removed from the budget originally prepared by Staff.  The savings were achieved through efficiencies and financing strategies, including the second year of the multi-year ‘financial reserve strategy’ that was implemented in 2024. Contrary to what you may have read or might be feeling yourself, this increase is not driven by lavish spending on pet projects. A superficial look at the budget outcome might lead to this conclusion, but I am intimately aware of the deep level of thought that went into the 2025 budget process, and it is a careful balance between investments in our city and affordability for taxpayers. I recognize that not everyone has the same priorities for city building, but consensus across nearly 600K people is not an achievable goal. The investments made are grounded in Council’s Priorities.  

The most significant investment in this budget is capital spending in critical areas like Transportation, which is about ensuring mobility for residents and businesses. One specific example that will not surprise anyone is increased investments in our road network, which, in many areas, is crumbling and desperately needs attention after many years of underinvestment. 

At the end of the day, our country, our province, and our city are experiencing many challenges, and those will only grow as we navigate through a trade war with the United States that we didn’t ask for. Many of these challenges are not the City’s to solve – at least not alone – even though they have significant impacts on residents and businesses. Council’s job is to ensure our city is operated responsibly and effectively while ensuring we are building a better, more vibrant city for the future. We are the lowest level of government (i.e., the least amount of funding and the most issues that affect you on a day-to-day basis), and we do not have the means to compensate for the impact of decisions (or lack thereof) made by upper levels of governments, and now foreign governments. We will continue to advocate for appropriate funding from the Province and the Feds and will work tirelessly alongside those partners as we navigate the very challenging times we are experiencing.   

For now, let’s refocus and dive into the details of the 2025 Operating and Capital Budget. 

BREAKING DOWN THE 5.6% PROPERTY TAX INCREASE 

CITY SERVICES 

There is no denying that the rising cost of living is creating daily challenges for many households in our community. The Mayor’s Directive acknowledged that fact and gave Staff direction to prepare a fiscally responsible budget. Despite a highly inflationary environment for costs related to operating a City, the increase for city operations is just 1.9%. This funding maintains service levels for the more than 70 services, including Fire, EMS, recreation, garbage collection, parks, etc. It also continues the 10-year transit plan to build our HSR bus service into the robust and reliable asset the Hamilton Chamber of Commerce has told us we need to attract the talent our businesses need to grow. A stronger HSR bus service will also ensure that all Hamiltonians have access to legitimate mobility options to get around our City.

Embedded in the category of City Services is Hamilton’s largest ever investment in housing and homelessness of $130M. This a crisis outside of the City’s formal responsibility (see chart below showing each level of government’s responsibilities), but without anywhere near sufficient funding from the Province (who are responsible for housing) or the Feds, we are forced to take action (however modest it might be given our resources) as no inaction will only make things worse.  

Follow this link and scroll down to Key Initiatives/Progress to read about Hamilton’s multifaceted response to the crisis. Further, you can read about what Mayor Horwath and other Big City Mayors are doing to advocate to the upper levels of government at solvethecrisis.ca  

I will touch on the topic of housing again in the Provincial Impacts and Legislated Services section below. 

CAPITAL INVESTMENTS 

The increase for capital projects is 1.5% and is necessary to catch up with the underfunding that has persisted for many years. I often hear about (and experience myself!) the deteriorating roads around Ward 12 and across the City. We simply have not invested nearly enough to keep up with the required maintenance, so in the 2023 budget, we began a 10-year plan to catch up on capital spending for our core assets. Here are some highlights of capital investments for 2025: 

Of the development charge exemptions totaling $38.5M in the above table, $12.5M are provincially legislated for affordable/non-profit housing development. Since the City cannot run an operating deficit like senior levels of government, we are forced to pass these costs on to taxpayers. There is no funding partnership with senior levels of government for this investment; it is entirely borne by Hamilton property taxpayers. (Note: development charges are the funds that municipalities are legislatively required to collect on new development to ensure that growth within the city pays for itself and does not become a financial burden on existing residents. 

Zooming out to get an appreciation for the change in Council’s strategy related to capital investment, I’ve provided the chart below showing annual funding totals for capital projects. A history of insufficient base funding coupled with inflation that was eroding purchasing power required a new direction; therefore, in 2023, Council approved a 30% increase in spending for state-of-good-repair funding to maintain our ageing assets. A further 16% was approved in 2024, and 5.5% in 2025. An ongoing 2.3% increase is planned for future years.  Without these increases, our infrastructure will not meet the expectations of residents and businesses, and each project will just be more expensive to complete when we eventually get around to it. 

Adding to the challenge before us, costs for infrastructure have increased by 55% over the past decade, with 26.1% of that happening in just the most recent three years.  The approved funding increase is a deliberate strategy to preserve purchasing power and ensure capital projects do not return to deficits, while at the same time chipping away at the backlog of neglected assets due to historical decisions. I think most readers would agree this is a prudent and necessary investment in our City.  

POLICE & 911 MODERNIZATION 

Maintaining existing Police service levels and funding the City’s mandatory transition to a modern 911 system generates a 1.5% increase for the 2025 budget. The police budget is driven almost entirely by labour and the associated collective bargaining agreements, but also includes $1.97M to implement body-worn cameras for front-line officers. As property and violent crime are top concerns in Ward 12 and around the City, supporting the Police Services increase was necessary.  

Next-generation 911 (NG911) is a mandatory new and improved 911 service. Once launched, it will give the constituents and first responders new tools that will enhance public safety by providing quicker and more accessible communication during emergencies. It involves a transformative technology upgrade to the traditional 911 system, moving from analog to digital IP-based networks, and will enhance 911 services, creating a faster, more resilient system. Specifically, it will allow for the seamless flow of voice, data, photos, videos, and text messages from the public to 9-1-1 and will give emergency operators and dispatchers the ability to identify the location of a call using GPS coordinates, resulting in a safer, faster, and more informed emergency response. This is a prudent and important investment for our community. 

PROVINCIAL IMPACTS AND LEGISLATED SERVICES 

This section accounts for a 0.5% (roughly $7.5M) increase in the 2025 budget. The gross impact of Provincial downloading is much greater than that, but the City has been able to offset a large portion of this burden. There are three main areas of impact: 1) Housing and Homelessness, 2) Mandatory development charge exemptions and 3) lack of ‘Building Faster Fund’ money in 2025. I will explain each of these items below. 

IMPACT 1: Housing and Homelessness Funding 

As I have written about on several occasions, Housing and Homelessness is a Provincial responsibility, but they have not responded to the growing crisis with any additional funding. Of the $192M in the 2025 budget for this area, the City will be contributing $130M. That equates to 10% of the entire property tax levy. If the Province contributed fairly to this area (i.e., far beyond their $26.9M contribution), your property taxes could be considerably lower. As it stands, the City has taken many steps to blunt the impact and avoid passing all of these costs to the 2025 tax levy.  

IMPACT 2: Development Charge Exemptions   

A second impact worth $12.5M (equivalent to ~1% of the tax levy) is the development charge exemptions mentioned in an earlier section. A reminder that these exemptions are intended to enable affordable/non-profit housing projects and can create a very positive incentive for this type of housing. This is a good thing! However, there is no partnership with the Province to reimburse Hamilton for this decision; therefore, the full financial burden is placed on Hamilton property taxpayers.  

IMPACT 3: Building Faster Fund 

The final area of Provincial impact I will address is the Province’s Building Faster Fund. The Province launched this fund to assist municipalities with the housing crisis, but it has a strict condition attached to it: funding only gets paid out if local housing targets are achieved. The City of Hamilton will not receive a repeat of 2024’s $17.6M in funding for 2025 because the Province hasn’t lowered targets for housing starts needed to receive this funding despite the fact that the development industry has ground to a halt. The City is being punished because of economic factors out of our control, and that ends up as an impact on taxpayers.  

In total, Provincial impacts #2 and #3 are worth $30.1M or about 2.3% of the tax levy. The City has used multiple financing strategies (including debt and use of financial reserves) to significantly reduce the impact on taxpayers. 

Although simply taking on more debt is not without consequences, it is an effective tool to spread the burden of large projects, or in this case, Provincial impacts, across multiple years to lessen the immediate impact on taxpayers. Fortunately, based on good financial stewardship, Hamilton has achieved a AAA rating, which means we are regarded as a low-risk borrower and it allows us access to low interest rates. 

2025 CAPITAL PROJECT HIGHLIGHTS IN WARD 12 

• Completion of two Garner Rd projects: water main and sanitary sewer upgrades 

• Hwy 52 left-turn lane. Implement designated left turn lanes on Hwy 52 at Powerline Rd as an interim safety measure until permanent reconstruction of the intersection is completed. 

• A parking study for the Ancaster Village Core that will assess supply and demand (both current and future) and make recommendations on how to best meet community needs. 

• Meadowlands Neighbourhood Roundabout Safety Enhancements (2025 focuses on Stonehenge / Kitty Murray Ln. This is year 1 of a multi-year plan for safety enhancements to Meadowlands roundabouts. 

• Ancaster Old Town Hall restoration (phase one): exterior wooden elements.  

• Morgan Firestone Ground Source Heat Pump - Feasibility and Design - Phase 1.  Phase 2 (construction) is dependent on 2026 funding.  

• Carrington Ct & Todd St: Design and reconstruction of intersection geometry to enhance pedestrian and roadway safety.  

• Meadowlands Rd. at Holy Name of Mary School: install raised pedestrian crosswalk to enhance pedestrian and roadway safety. 

• Grant applications for the Ancaster Senior Achievement Centre Gym. Although City funding hasn’t been earmarked for this project in 2025, the City has submitted a grant application to expand the Centre with a brand-new gymnasium 

• Ancaster Municipal Centre / Library roof and HVAC replacement 

• Streetlight installation for the remainder of the Mohawk Meadows neighbourhood. The plan for future years can be viewed here  

Criticisms of the Budget Process 

In late February, you may have read an article in The Spec about a public statement from five Councillors that levelled harsh criticism on the budget process and made disparaging remarks about the 2025 Budget Chair Councillor Maureen Wilson, Mayor Horwath, and our City Clerk, and called the process undemocratic.  

Although frustration while learning a new process is understandable, I can assure Ward 12 residents that the leadership that helped Council navigate the budget process did so with the highest level of integrity and respect.  

As cited in the article, there were, indeed, several motions that were ruled out of order. When a motion attempts to cut spending from a previous year’s budget, or eliminate funding for work that is already underway, they are not actionable and is thus deemed out of order. In my opinion, the constructive approach for the Councillors that had this experience would be to acknowledge and learn from the error rather than lash out at their colleagues and Staff.  

At the root of the larger frustrations expressed about the process (i.e., the Strong Mayor Powers that made this budget different than previous years), the City must follow Provincial legislation, so requests for change should be focused on the Province. In fact, in the weeks following the budget, Council unanimously approved a motion that will formally request the Premier to remove all Strong Mayor Powers from the City of Hamilton.  

Sustainable Use of Reserves 

Another frequent criticism from some of my colleagues has to do with the use of reserves to offset the burden that City budgets have on taxpayers. The argument is that using reserves is unsustainable and only serves to temporarily insulate the public from increases in spending. Reserves, in their simplest terms, are funds that are stowed away for a rainy day, or for use on a particular project in the future. In the City’s case, there are obligatory reserves (i.e. development charges that we are legislatively required to hold to pay for new or upgraded infrastructure as the city grows). The collection and spending of these funds is very clearly defined, and the City has no discretion on their use. Then there are discretionary reserves that are under the complete control of Council. This pool of funds is routinely accessed as part of the budget process. This table demonstrates that the use of reserve funding is not unique to this term of Council; our first budget was for 2023.  

It is accurate that the tens of millions of dollars have been used towards achieving the Council priority of reducing the burden on property taxpayers. Before Council implemented the current reserve strategy, Staff walked us through a very thorough, thoughtful, and sustainable multi-year plan that would leverage our available reserves without emptying the tank. Take note of the navy-blue bar in the diagram below. It shows the discretionary reserve balance that has been accessed for each annual operating and capital budget during this term of Council. You can see relatively modest draws through a very challenging period of time, followed by replenishment to ensure the reserve is available in the future. This is a smart and sustainable approach that has provided great benefits to property taxpayers. 

If you’d like to dig even deeper into the 2025 Operating and Capital Budget, please use the following links: 

• Recording of the Budget meeting January 23, 2025, that features opening remarks by Budget Chair Councillor Maureen Wilson and the presentation by General Manager – Finance and Corporate Services, Mike Zegarac.  

• The slide deck from GM Zegarac’s presentation 

• Economic Outlook by Andrew Grantham, Executive Director and Senior Economist – CIBC Capital Markets. 

For those of you who have reached the end of this supplementary 2025 Budget Newsletter, I thank you for reading and sincerely hope you have gained a deeper understanding of the detailed process, deep thought, and careful consideration by Council and Staff that informed the creation of this budget.