Transit Area Ratings Review: Council Debates Tax Shifts Without Service Changes

The Transit Area Ratings Review Subcommittee reviewed options for how Hamilton allocates transit costs under file FCS 26016, "Options for area transit rating of transit services." Staff said any change would not raise new revenue but would instead "result in a redistribution of who pays for the service across the municipality." Members focused on how the options would shift taxes between urban, suburban and rural properties, whether those shifts would come without service improvements, and whether a hybrid model should be explored. The subcommittee voted to receive the report, remove Option One from further consideration, and send the matter on for further discussion at the General Issues Committee.

Topics Discussed

1. AREA RATING OPTIONS FOR TRANSIT FUNDING

Staff presented two options for changing how transit costs are allocated: - Option 1: apply the transit levy across all properties in Hamilton - Option 2: apply the transit levy across all urban properties only

General Manager Mike Zigeric said "changes to how transit service costs are recovered do not generate additional revenue for the city. Rather, any change would result in a redistribution of who pays for the service across the municipality."

Staff also explained the current boundary issue. Mark Tadeson said, "Currently rural properties are not levied for transit," and under one option, properties outside the transit boundary would begin paying.

2. TAX SHIFTS AND PROPERTY TAX IMPACTS

Much of the discussion centered on whether suburban and rural taxpayers would face higher bills without seeing better transit service.

Councillor Brad Clark said, "I'm trying to understand how we explain to the residents in Ward 9 and Stony Creek and any of the suburbs for that matter how eliminating an area rating is a good thing for that community other than their taxes go up. If the service levels aren't going to change, your taxes are going up. But then in the future, your service levels are going to change, your taxes will go up again."

Resident Esther Pauls raised a similar concern, saying, "The suburbs are going to pay much more in property taxes. The city's going to pay much less. No service changes are going to occur because that's not what this tax shift policy is about."

Councillor Jeff Beattie was more direct about Option One, saying it "would represent a 3.4% 4% tax increase to my residents that I'm privileged to represent without any discernable, appreciable, or even necessarily service upgrades. The disconnect between taxes and services is significant. The proposal to have everybody pay the same rate whether they get the service or not is bizarre."

3. SERVICE LEVELS AND EQUITY CONCERNS

Members repeatedly returned to the link between taxes paid and service received.

Clark said residents could face one increase now through a tax shift and another later if council eventually improves service: "But then in the future, your service levels are going to change, your taxes will go up again."

At the same time, some members argued the discussion should also consider citywide fairness. Councillor Ted McMeekin said, "When something benefits one, it should benefit all."

4. POSSIBLE HYBRID APPROACHES

The subcommittee discussed whether council should reject a citywide levy and instead consider a blended approach.

Councillor Alex Wilson said, "I do think it would go a long way to talking to our rural communities and to rural Hamiltonians about how what area rating is meaningfully," adding that the issue is tied to "how do we deal with the fact that transit increased in the suburbs."

Wilson also said he wanted Option One removed from consideration. Staff indicated council is not limited to the two models in the report and could ask for other approaches, including phased implementation or a hybrid structure, to be studied further.

5. LEGISLATION, PROCESS, AND NEXT STEPS

Staff referenced the Municipal Act provisions that allow area rating where services differ across the city. They also said council can revisit tax policy annually.

Wilson said, "The tax policy comes before council each year. So it would be at the discretion of council each and every year," including the ability to change any phase-in period after adoption.

Clark also questioned the committee's role in the process, asking, "why does this committee have to make the decision if under strong mayor powers the budget is the mayor's responsibility?"

The matter was left for further discussion at the General Issues Committee.

Motions

Passed: - Adoption of minutes for April 11, 2024 - Adoption of minutes for March 2, 2026 - Receive Report FCS 26016, "Options for area transit rating of transit services" - Remove Option One from consideration

Deferred / Referred: - Further discussion of transit area rating options to the General Issues Committee

Attendees

Councillors and members identified in the meeting materials and discussion included: - Tom Jackson - Andrea Horwath - Mark Tadeson - Esther Pauls - Rob Cooper - Alex Wilson - Jeff Beattie - Mike Spadafora - Cameron Kroetsch - Ted McMeekin - Brad Clark - Craig Cassar - Tammy Hwang - Maureen Wilson - Matt Francis - Nrinder Nann

Staff specifically identified: - Mike Zigeric, General Manager