Silk Purses and Sows' Ears: Hamilton Council’s Financial Illusion

The old saying “you can’t make a silk purse out of a sow’s ear” feels tailor-made for what’s about to be presented to the Finance and Monitoring Committee this June. On the surface, Council’s financial report paints a surprisingly rosy picture—transforming what should be a warning signal into something that looks deceptively desirable.

Yes, the headline might catch your eye: the “balancing the books” result is $22 million better than budget, a significant improvement on the projected $26.2 million deficit. But don’t be fooled—this is good news dressed up in its Sunday best, concealing a far more troubling reality.

Dig a little deeper, and the cracks begin to show.

Rates and fees are up, yes—but only because Hamiltonians were hit with a 16.5% rates increase, and visitor income from the likes of the Gardens and Zoo ticked upward. After that, the news turns sour quickly.

·       Subsidies and grants are forecast to fall by $12.5 million.

·       Interest income drops by $4.5 million.

·       Development contributions are down $10.6 million.

·       Other revenue—including fines, rents, and fuel taxes—falls by $27.7 million.

·       Capital revenue is $6 million lower.

·       Vested asset income plunges by $18.5 million.

In total, forecast income is down a staggering $27.5 million compared to last year. Council will be trying to run the city on just 95% of the revenue it had previously. In a time of rising costs and economic uncertainty, that’s no small shortfall.

Surely,then, Council must be tightening its belt? Unfortunately, the opposite is true.

·       Staff costs are set to rise by 5.3%, hitting $129 million—up from $122million.

·       Depreciation increases by $3 million.

·       Operating and maintenance costs climb another $2.2 million.

·       Finance costs rise by nearly $700,000.

·       Property costs go up by $800,000.

There is a silver lining—professional and admin costs are forecast to drop by $45 million. But that reduction likely reflects timing issues rather than structural savings. Those categories include consultant fees, legal services, audit costs, and even grants, many of which may simply not have landed yet.

The bottom line? The forecast surplus for this year has been revised down to $36million, nearly halving last year’s already disappointing $69.5 million result.

And let’s not forget—2024 was hardly a benchmark for success. That year ended with a surplus $104 million lower than 2023, and a “balancing the books” deficit of $34 million—almost $30 million worse than budgeted.

This year looks no better. In fact, it looks worse.

The Finance and Monitoring Committee would do well to set aside the spin, confront the economic headwinds with clear eyes, and start tailoring Council’s spending to fit the financial reality. No one expects miracles—but we should expect prudence.

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