Time to Retire Special Infrastructure Levy?

The levy seemed like a fair compromise and an equitable resolution to the difficult task of harmonizing tax rates for area-rated services.

By Viv Saunders
Published March 11, 2016

Area rating policies are not supposed to result in significantly more revenue to the City.

In 2011, Council adopted a plan to phase out area rating for culture and recreation, fire protection and sidewalks over four years by bringing the rates paid by different parts of the city into alignment. The mechanics of the phase-out was to increase the cost of these services by 25 percent per year in the areas paying lower rates, while an equal reduction was provided to the former Hamilton taxpayers.

(This first stage of ending area rating did not include transit, which Council decided they would deal with in 2015 once the four-year phase-out of the other area rated services was complete. So far that has not happened.)

The following chart shows the schedule of area rating normalization that Council approved in April 2011. Under the new system, the City moved to a simple urban/rural split in whether ratepayers were charged for a given service.

Area Rating Phase-Out Schedule
2011 2012 2013 2014
Hamilton -0.7% -0.7% -0.7% -0.7%
Ancaster 0.8% 0.8% 0.8% 0.8%
Dundas 1.0% 1.0% 1.0% 1.0%
Flamborough 1.7% 1.7% 1.7% 1.7%
Glanbrook 3.1% 3.1% 3.1% 3.1%
Stoney Creek 1.5% 1.5% 1.5% 1.5%
Hamilton N/A N/A N/A N/A
Ancaster -0.6% -0.6% -0.6% -0.6%
Dundas -0.4% -0.4% -0.4% -0.4%
Flamborough 0.3% 0.3% 0.3% 0.3%
Glanbrook 1.7% 1.7% 1.7% 1.7%
Stoney Creek 0.1% 0.1% 0.1% 0.1%

To offset the higher levy that was already being paid for these same services in Wards 1-8 during the phase-out, the old city ward councillors had the option to make a compromise: instead of paying out the reduced levies in property tax savings, they could instead continue to collect the money and put it into reserves for wards 1 through 8 for small capital investment projects.

They chose to claw back the levy savings. Hence, the Special Infrastructure Levy was born with $420,000 initially being provided to each of the ward 1 to 8 councillors in the first year of the phase-in, to spend at their discretion. It seemed like a fair compromise at the time and an equitable resolution to a difficult task.

The total annual Special Infrastructure Levies increased from $3.3 million in 2011 to $6.7 million in 2012, $10.7 million in 2013, and $13.4 million in 2014, amounting to a total of $33.5 million over the course of those four years collected from the Wards 1-8 residents and allocated equally to the individual ward reserve funds.

During this period of time, Council was provided with the option to reduce the annual contributions but every year, they decided against passing on the savings to the ratepayers in Wards 1-8.

It's clear that these funds have been put toward some excellent projects in each of those Wards. At least some of our elected representatives truly engage the public on how those funds are allocated.

But seriously: 8 of our 15 City of Hamilton councillors were given $4,196,521 each for discretionary spending over the course of those four years?

After 2014 and including the current proposed 2016 budget, it was at the discretion of Council each year to amend this practice, remove the annual contribution to the eight old-city reserves and pass on the tax savings to properties in Wards 1-8. To date, Council has supported continuing the current practice of what is now being referred to as their "slush fund" at $1.675 million each.

The annual surcharge to Wards 1-8 is $100 per year, based on the average assessment value per home: a surcharge whose purpose has expired, but is still being paid by some of our most marginalized residents.

Regardless of what appeared to be a temporary flat 0.7% Special Infrastructure levy per year, in actuality the cost split and dollar values associated with this policy appear to have resulted in these allocations:

Annual Base Cost of Area Rated Services for 4-Year Phase-Out
Year 2011 2012 2013 2014 2015 2016 (Proposed)
Recovery 25% 50% 75% 100%
Wards 9-15 $3,357,217 $6,714,435 $10,071,652 $13,428,869 N/A N/A
Wards 1-8 $10,071,652 $6,714,435 $3,357,217 $0 N/A N/A
Wards 1-8 Special Infrastructure Levy $3,357,217 $6,714,435 $10,071,652 $13,428,869 $13,428,869 $13,428,869
Reserve Allocation per Ward (1-8) $419,652 $839,304 $1,258,957 $1,678,609 $1,678,609 $1,678,609

In addition to these disclosed costs, what about the soft costs that aren't easily quantified? The added costs to administer this pool of funds such as the Councillor's time/salaries, Executive Assistants, City Clerks, Finance personnel, and so on. What have those resources added up to over the last six years?

In drawing an analogy, this Special Levy is similar to being entitled to an income tax refund and ticking the box that directs part of your refund to the Ontario Opportunities Fund. Only in this case, it is Council who are ticking that box on your behalf.

It may be time to uncheck that box and remove this Special Infrastructure Tax Levy from our municipal tax bylaw, which is scheduled to be ratified at the next Council meeting on Wednesday, March 30.

Viv Saunders has loved living in six different wards of Hamilton. She is a Chartered Life Underwriter, Certified Financial Planner and Chartered Financial Consultant, wife, mother of two and has recently been utilizing her life experiences to become an informed and actively engaged citizen.


View Comments: Nested | Flat

Read Comments

[ - ]

By Ryan (registered) - website | Posted March 11, 2016 at 07:43:01

As a resident and ratepayer in one of the wards that collects the Special Infrastructure Tax Levy, I'm happy to keep paying it - with an important caveat. I support it as long as the money is allocated via participatory budgeting so that it gets deployed into citizen-led projects that address neighbourhood infrastructure deficiencies and make real improvements.

So far, only two of the eight old-city wards practice participatory budgeting: Ward 1 and Ward 2. Ward 3 Councillor Matthew Green has also expressed support for participatory budgeting, and establishing a PB system in Ward 3 is on his issues checklist.

Permalink | Context

By ergopepsi (registered) | Posted March 11, 2016 at 11:34:44 in reply to Comment 116963

Thanks for the reminder - PB submissions close March 25 for Ward 1 people!

Permalink | Context

By StephenBarath (registered) | Posted March 11, 2016 at 09:25:00 in reply to Comment 116963

It seems bizarre to me to pay extra in taxes to contribute to a slush fund that can be deployed however the councillor cares, and then be used as an excuse by other councillors as to why my part of the city should not receive funding for regular infrastructure projects.

It’s nice that a few of the wards use participatory process to decide how the money is spent. I think they try hard to make it as broadly engaging as possible, but that’s a tall order and I’m not sure how well volunteers can be expected to do it.

I agree with Viv’s conclusion that it’s time to “uncheck the box,” especially as Wards 1-8 include many residents least able to afford extra taxation. Some of the projects funded by through this slush fund have been regular infrastructure that a city should be providing- things like crossing lights. The wealthiest residents of the City get “their” crosswalks paid for through general revenue- the poorest have to pay for them through a special levy. That makes no sense.

Permalink | Context

By Ryan (registered) - website | Posted March 11, 2016 at 09:51:15 in reply to Comment 116967

You're quite right, of course. The right thing to do is fund essential walking and cycling infrastructure from the general levy. Unfortunately I have very little hope that this city will start to do the right thing any time soon.

See, for example, the budget Council is just about to pass, which continues the unsustainable practice of spending tens of millions of dollars a year on new road construction even while we fall further and further behind on maintaining the infrastructure we already have ($2 billion in unfunded road work alone).

The Special Infrastructure Levy is an ugly procedural hack, but it's a hack that works, at least for the short to medium term, in those wards where the councillor has a meaningful system in place to ensure the funded projects are decided by the community.

Permalink | Context

[ - ]

By Baciami il culo (anonymous) | Posted March 11, 2016 at 07:48:13

Can someone say $1.7 million year round Bocce court?

Permalink | Context

[ - ]

By nobrainer (registered) | Posted March 11, 2016 at 07:50:03

Would it be a crazy idea to add special levies in ward 9-15 so they can also have a pool of money to spend on local stuff?

Permalink | Context

By JasonL (registered) | Posted March 11, 2016 at 09:51:36 in reply to Comment 116965

check the area rating set-up. They have a giant pool of money to spend on their local stuff: everyone's

Permalink | Context

[ - ]

By Suburbanite (anonymous) | Posted March 11, 2016 at 07:58:24

As a resident and taxpayer in one of the Wards that doesn't collect a Special Infrastructure Levy, I'd be happier if we were treated equally and given a choice to opt in or opt out - with the same very important caveat Ryan has outlined.

Permalink | Context

[ - ]

By StephenBarath (registered) | Posted March 11, 2016 at 09:30:59

Viv- thanks a lot for your last few articles, not least this one, on municipal spending. Even if someone doesn’t agree with your conclusion, it’s rare to see this kind of research and simple explanations. These are issues many of us don’t know much about, so to see it written so clearly is very helpful.

Permalink | Context

By Viv (anonymous) | Posted March 11, 2016 at 17:59:28 in reply to Comment 116968

Thanks Stephen! Have to give credit to the magic touch of the editor though. His skills at clarity are exemplary!

Permalink | Context

[ - ]

By CharlesBall (registered) | Posted March 11, 2016 at 09:46:27

Has anyone looked at their hydro bill lately. It is indecipherable; filled with levies and debt repayment charges and credits and it is up 15% year over year which is literally scandalous.

Over 25% of our budget is policing which is 95% salaries and pensions and benefits. Labour costs make up the vast majority of our budget.

Levies that pit one area against another or one line item against another are fractious and feed the ability of government to hide the hard issues facing us. The city's infrastructure expenses, even with the deficit, are a pittance compared to the main issues facing us which are that we cannot afford to hire the people we hire at the rate we hire them for the work they do. We are not getting value for our money.

Let me put it another way. If we could get a hold of the monster that really exists, we could have free bus service in Hamilton and nobody would notice it on their tax bills whether they lived in Flamborough or downtown.

I have said before that my taxes have quadrupled in 20 years. We pay about the highest municipal taxes in the whole wide world. The city says "Look, we kept the increase to under 2%, but the increases have been over and over and compounded. No one talks about the compounding. This cannot continue.

We have potholes not because we do not have the money to fix it. It's because we have chosen to spend our money in an ineffective way.

Raise the Hammer should become an advocate for fiscal responsibility. You have to attack the big items. Farting around with transit levies is small potatoes. We are way beyond being over-charged and under serviced.

Comment edited by CharlesBall on 2016-03-11 09:51:14

Permalink | Context

By DowntownInHamilton (registered) | Posted March 11, 2016 at 19:03:55 in reply to Comment 116969

Well said!

It kills me that we don't run government like a business. Our elected officials talk a good talk, but then never actually go full hardline on anything. They tell the police no increase, they come back with a smaller increase and we all act like we came out winners. We see waste left right and centre with our city staff and contractors but we don't do anything to fix it. If we got rid of the bloat and waste, and ran, say, a six sigma project against council, we could have many things while seeing taxes decrease!

Permalink | Context

By Cultosaurus (registered) | Posted March 14, 2016 at 09:43:58 in reply to Comment 116985

Not likely, but we fully 75% of council would be fired.

Permalink | Context

[ - ]

By JasonL (registered) | Posted March 11, 2016 at 09:50:17

Personally I would much rather see this small amount of money continue to be used for great local projects and initiatives instead of being added to the general tax fund where it will be wasted on 11 potholes somewhere. We do almost no city-building or forward thinking spending in this city. $1.6 million per year has gone a LONG way towards some fantastic quality of life improvements in Hamilton. With a $2 billion budget, I'm happy to see this amount remain for local ward projects.

Permalink | Context

By CharlesBall (registered) | Posted March 11, 2016 at 09:54:03 in reply to Comment 116971

A 5% cut to the police budget would give us $50,000,000.00 or more than 20 times the levy each year.

Permalink | Context

By Ryan (registered) - website | Posted March 11, 2016 at 10:07:02 in reply to Comment 116974

Better check your math. The police budget for 2016 is $164.1 million. Five percent of that is $8.2 million - a decent chunk but a bit less than the total special levy for wards 1-8.

Permalink | Context

By CharlesBall (registered) | Posted March 11, 2016 at 10:19:49 in reply to Comment 116975

Sorry you are correct. Meant to say operating budget and I rounded up. It's closer to $40 million.

Permalink | Context

By Suburbanite (anonymous) | Posted March 11, 2016 at 10:49:12 in reply to Comment 116977

Charles, the figure you're looking at includes all Boards such as the conservation authorities, library board, etc. The HPS budget is $164.1 million. Still a significant number but a 5% cut there is still $5 million below the $13 million levy in the subject of this article.

Permalink | Context

[ - ]

By highasageorgiapine (registered) | Posted March 11, 2016 at 10:11:00

i agree that the ward specific levies are an inefficient way to distribute funds. the administrative costs associated with distribution as noted would be significant and duplicating services we already pay for.

i also think the comment mentioning that certain areas of the city need to use these funds for essential infrastructure while other areas of the city just use the pooled funds is an important thing to note. this is not appropriate as it disadvantages poorer areas.

i am a bit hesitant about the participatory democracy thing also... the government is elected to make hard decisions that may not be liked by everyone, but serves the interests of society as a whole (theoretically, obviously).

Permalink | Context

[ - ]

By moylek (registered) - website | Posted March 11, 2016 at 15:16:05

The area-rating funds are a questionable compromise: we get slush funds for councillors instead of tax rebates for residents.

But the participatory-budgetting process turns that sows ears into a silk purse of sorts: some Ward and neighbourhood priorities get funded which otherwise probably wouldn't be.

Go to to submit ideas - until March 25th.

Anyone can submit ideas, btw - it's only voting which is restricted to Ward 1 residents.

Comment edited by moylek on 2016-03-11 15:17:00

Permalink | Context

[ - ]

By KevinLove (registered) | Posted March 11, 2016 at 16:04:18

Ward 2 has not done a participatory budget since 2014 and shows no signs of doing this in 2016.

Permalink | Context

By DowntownInHamilton (registered) | Posted March 11, 2016 at 19:05:57 in reply to Comment 116983

Any ideas on the reasoning? I voted in the 2013 and 2014 participatory budgets prior to moving but thought that they were still going stong.

Sidenote, do any of the highlighted items seem to be getting done? I know that they've faced a ton of resistance and a lot of "we can't do that because.." instead of "we're smart people, let's figure out how we can do this...".

Permalink | Context

By DavidColacci (registered) | Posted March 12, 2016 at 18:26:41 in reply to Comment 116986

we have a kid at work that likes to say 'we can't do that because'....we tell him that if he put the same energy into finding a solution that he does into nay saying, he would already be done!

Permalink | Context

[ - ]

By regional (anonymous) | Posted March 13, 2016 at 13:31:49

the city wastes unbelievable amounts of money. for example, take a look at the new "skating track" that is being built in memorial park in waterdown at a cost of OVER $1.2 million!

Permalink | Context

View Comments: Nested | Flat

Post a Comment

You must be logged in to comment.

Events Calendar

Recent Articles

Article Archives

Blog Archives

Site Tools