Mayor Andrea Horwath will issue her 2026 Budget Mayor’s Directive tomorrow morning, October 7, outlining her financial expectations and service priorities for her final budget before voters decide her fate next October.
The announcement will be followed by a public statement at 11:45 a.m., according to a release issued this afternoon by the Mayor’s Senior Communications Advisor Amanda Kinnaird.
Under Ontario’s Municipal Act, the Strong Mayor is responsible for preparing and proposing the annual municipal budget.
The process formally begins with this directive.The Mayor must present her final budget by February 1, 2026.
Once presented, Council has thirty days to pass resolutions amending the budget by simple majority vote.
Should the Mayor veto an amendment, Council is required to muster an 11-vote, two-thirds majority of all Council Members to override the veto. The Mayor’s proposed budget is automatically adopted unless Council succeeds in passing and defending amendments.
Looming Fiscal Crisis Masked by Reserve Depletion
In an early September budget outlook memo, General Manager of Finance and Corporate Services Mike Zegarac projected that the 2026 levy-funded budget requires an increase of $131.7 million, or 10.6 per cent overall, to cover cost pressures related to staffing and infrastructure.
The City has not issued a projection for the entire budget. Due to the City’s February 2024 cybersecurity failures, the 2023 and 2024 financial audits are outstanding, and the City has not completed its financial information returns for those years.
The City plans to use its remaining discretionary operating reserves to lower the tax levy impact to 8.9 per cent. Following 2026, the discretionary operating reserve fund will be empty, with only $1 remaining.
The single largest driver of the projected increase is employee-related costs, accounting for approximately $44.6 million. The City of Hamilton’s employee headcount reached 9,449 this summer, up 12 per cent from the 2022 headcount.
The staff memo suggested Council could lower the levy increase closer to 6.6 per cent by pausing planned service enhancements.
The memo states the cost of the final year of the “10-Year Transit Strategy” (which is actually Year 12 after two previous pauses) is approximately $3.9 million. An additional $7.5 million could be saved by pausing the planned increase to funding meant to address the City’s multi-billion infrastructure deficit.
Election-Year Fiscal Cliff
No projections have been released regarding the expected state of municipal finances for the 2027 budget year. The new Council that will be sworn in following the upcoming election will face the daunting challenge of determining the balance between spending cuts and tax increases without any remaining operating discretionary reserve.
The municipal election will be held on October 26, 2026, with Mayor Horwath having stated she will run for reelection.
The 2026 Council Meeting Calendar issued by the City Clerk last week states there will be a “Special Council – Budget” meeting on February 13, 2026.
This indicates the Mayor’s budget will be released shortly after City Council returns from a four-week Christmas recess on January 12.
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Published: October 6, 2025
Last updated: October 6, 2025
Author: Joey Coleman
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