Whether you drive, ride a bike or just cross a street, you’ll have noticed that roads in the older city are falling apart. This Ward 1 letter will focus on some of the factors that have collided to create this bumpy ride.
Auditor General’s Roads Value for Money Audit
In July 2021, the long-anticipated city auditor’s review of Hamilton’s roads was released. The auditor investigated whether Hamiltonians were getting value for their tax dollars. The answer was an unequivocal “no”. The audit found that there was no process used in making strategic investment decisions for roads. Also, pavement conditions were found to be inconsistent, preservation management had been underemphasized and contractors had not been held to account for low-quality road work.
Asset Management
Asset management is a strategy that guides how and when a city reinvests in an existing capital asset like a road or a roof on a recreation centre. Just like your own home, the goal is to avoid letting things go to such an extent that you face huge bills to repair major damage. The other goal is to ensure that future generations of taxpayers do not face enormous bills for repairing deteriorated assets that are being used by the current generation.
Hamilton’s Road Deficit
Hamilton is suffering from an infrastructure deficit of $3.2 billion. For roads, bridges and traffic, the City is short $1.6 billion to improve our road network to good condition. In 2016, Hamilton’s roads received a “C” grade with a note that there’s a lack of dedicated funding to sustain even that letter grade.
Capital Reinvestment Strategy
Most Ontario cities and towns maintain a reinvestment threshold of 15% to 20% for existing assets. This means that 15% to 20% of the value of the assets is set aside each year to reinvest in maintaining what exists so they don’t further deteriorate, and replacement costs do not continue to grow. Since the early 2000s, Hamilton’s threshold of reinvestment spiralled downward to 9% (2018). The worsening condition of our assets tell us that this was neither prudent nor frugal.
Bleeding Our Assets
The City began dedicating 0.5% of tax revenues raised each year from the levy (that is, not rate-based) to reinvest in our existing assets. This amounts to roughly $4.5 million per year - - on a deficit that is greater than $3 billion. Clearly, it is insufficient. In 2014, the former Hamilton City Council dedicated 0% and in 2021 most of the Council voted again for a 0% levy contribution. Instead, most of Council opted to take the $4.5 million from reserves. I did not vote in favour of this decision.
Raiding Reserves
Reserves are like savings accounts. Raiding reserves, absent a plan, is not good financial practice nor does it demonstrate the kind of discipline needed in governing an older city like Hamilton. It limits a city’s opportunities to address core problems and to take advantage of strategic investment opportunities that could enrich Hamilton’s tax base, ultimately lessening the property tax burden over time.
Healthy reserves enable the city to enter into important infrastructure agreements – roads, social housing and water/wastewater – with the federal and provincial governments when Hamilton is required to bring matching dollars to the table. The City gets much-needed investment for one-third dollars.
This is critically important because over the last few decades municipalities in Ontario have had to take on more responsibility for infrastructure.
The same July 2021 week that Hamilton Council received the Auditor General’s Roads Value for Money Audit, the City’s treasurer recommended that Council deliberate on a strategy later in the autumn budget session for $30 million just received from the Government of Canada. With absolutely no regard to the Auditor General’s findings, most Council opted to immediately divide the fund by 15 and divert $2 million to each ward Councillor to be spent on politically chosen roads and sidewalks. A similar manoeuvre occurred in 2020 when the $4.5 million taken from reserves was split 15 ways and given to each Councillor. I did not vote for either move.
Looking Ahead
The state of our road network tells us that the chickens have come home to roost. The next Hamilton City Council, whatever its make-up, will have some significant decisions to make. And by the way, any widening of the LINC and Expressway under these conditions would be a financial disaster, adding hundreds of thousands of dollars in annual operating costs not to mention the multi-millions needed to build.
Fortunately, the previous Provincial Government put a pathway in place that may help the residents of Hamilton, now and future.
In 2018, the Government of Ontario announced that all municipalities, including the City of Hamilton, must set out plans on how they are going to take care of their ageing infrastructure (Asset Management Planning for Municipal Infrastructure Regulation, O.Reg 588/17). This is a good thing. It will force a public discussion on how our city is going to tackle its infrastructure deficit to find a way out of the pot hole we find ourselves in. It should enforce financial discipline and extract political accountability. We have no time to waste. I hope that you will join in the discussion.
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Maureen's opinion piece first appeared in The Hamilton Spectator on April 23, 2022.