Hamilton and Mississauga—a tale of two cities’ spending

Mississauga and Hamilton are two of the largest municipalities in the Greater Toronto Hamilton Area (GTHA) and over the last decade or so, the two have been on very different fiscal paths.

Mississauga, like 21 other municipalities in the GTHA (26 total), recorded an increase in per-person spending (after adjusting for inflation) between 2009 and 2019. The starting date is based on a provincially-provided data set that standardizes accounting between municipalities in the province. The end date of 2019 is used to avoid anomalies linked with COVID in 2020.

As illustrated in the first chart below, per-person spending in Mississauga in 2019 was $3,072, up from $2,641 in 2009 (figures adjusted for inflation). Put differently, Mississauga ranked 24th of 26 municipalities in the level of per-person spending in 2009 but increased to 15th in 2019 with its 16.3 per cent increase (see second chart). Indeed, among the 26 municipalities, Mississauga recorded the 10th highest increase in per-person spending over this period.

In total, four municipalities in the GTHA recorded decreases in per person spending over this time period but three were small declines: Milton (-3.8 per cent), Caledon (-0.9 per cent) and Toronto (-0.8 per cent). Hamilton is a standout as it recorded an 11.2 per cent decline in per-person spending between 2009 and 2019 after adjusting for inflation (second chart).

Specifically, Hamilton’s per-person spending declined from $3,501 in 2009 to $3,108 in 2019 (first chart). In 2009, Hamilton had the second-highest level of per-person spending among the 26 municipalities in the region. In 2019, it had fallen to 12th and slightly below than the municipal average for the region of $3,203.

So how did Ontario’s Steeltown achieve this reduction? It’s an important lesson for all governments. The total nominal—that is, the plain dollar value of total municipal spending in Hamilton—grew from $1.46 billion in 2009 to $1.73 billion in 2019. In other words, the nominal value of spending in Hamilton grew by 18.4 per cent over this period.

However, inflation over this period was 23.3 per cent and the city’s population grew by another 8.3 per cent. Hamilton’s population growth during this period ranked 18th among the 26 municipalities. The combination of inflation and population growth meant that overall per-person spending actually declined because the growth in nominal dollars wasn’t sufficient to offset inflation and population growth.

The decline would have been even starker had Hamilton imposed more discipline on its growth in total spending over this time period. The key, however, is understanding how population growth and even modest inflation coupled with moderate restraint in spending can result in marked declines in per-person spending.