Comment 37994

By A Smith (anonymous) | Posted February 13, 2010 at 04:46:18

The City of Hamilton needs to improve its balance sheet. We should introduce a sales tax as soon as possible and start building up our cash reserves. As of Dec 31, 2008 Hamilton's debt to equity was 2.82, while in Burlington it was 0.76 and in Oakville it was around 1.

If Hamilton added $600M to its Dec 31, 2008 cash position of $39.1M, our assets would be 1.831B and our debt to equity would be around 1. If we wanted to reach Burlington debt to equity levels, the city would need another $875M in cash on its balance sheet.

If a government allows itself to be taken advantage of by its citizens, the end result is a non functioning city. Detroit is a prime example. It constantly spends more than it brings in, has debt to equity levels of around 9 and the result has been the slow destruction of the city. By lavishing citizens with things they didn't pay for and taking on debt obligations to do it, they City of Detroit has f-ed itself.

Strong, prosperous communities are the result of local governments that act in their own self interest and ensure they have the financial resources to improve themselves. Hamilton is not as bad as Detroit in this regard, but it should strive to be more like Burlington, a community that has seen faster revenue growth than Hamilton, even though they have less green-space than Hamilton.

A sales tax, dedicated to improving the city's finances, would do wonders for Hamilton. It would allow for faster revenue growth, which in turn could be plowed back into the city's aging infrastructure and this would further increase Hamilton's attractiveness as a place to live and work. The trick is for the city to start putting itself first, rather than just wallowing in high levels of debt.

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