Rob Ford misinformed on critical budget issues

The media outlets were maybe a bit too charitable with our mayor on Friday, as, in an interview with John Oakley on AM640, Rob Ford claimed that labour costs made up 80% of the city’s operating budget. In actual fact, that figure is about 48%. The disparity between the two percentages seems too large to be the result of a simple mental lapse or an exaggerated rounding error — it would seem, in this case, Ford was simply misinformed.

The discrepancy — paragraph six in the Star; paragraph eight in The Globe; paragraph eight in The Post; unmentioned in the Toronto Sun — is alarming because Ford was using his understanding of the city’s spending on labour to justify potentially laying off thousands of public sector workers.

The Globe & Mail’s Elizabeth Church and Jill Mahoney:

On the radio Friday, the mayor lamented that the city is spending 80 per cent of its budget on labour costs and vowed to bring that number down.

“In business, the first thing you look at is the labour and your labour should be making up, you know, maximum 20 per cent,” he said. “We’re at 80 per cent. It’s just unheard of. So I think that [we’re] taking a serious look at non-union and union employees and exactly what they’re doing and taking it from there.”

via Ford talks layoffs, suggests labour costs are four times too high — The Globe & Mail.

Cutting 75% of the City’s public workforce — about 50,000 strong — would mean laying off approximately 37,5000 people. Even assuming only half that number actually live within the borders of the City of Toronto, that still works out to an estimated 1.3% rise in Toronto’s unemployment rate. Regardless of whether these workers are providing necessary or efficient services, dumping that many people into unemployment would have disastrous impact on the regional economy.

Also alarming, and from the same interview, was the mayor’s seemingly sincere attempt to equate revenue cuts with spending cuts.

The Toronto Star’s David Rider:

Despite the layoff threat, Ford made balancing the 2012 budget sound positively easy.“We’ve saved over $70 million in the first six months so if we can find $70 million I’m sure we can save $700 million, that’s for sure,” Ford said.“So many great ideas are coming forward and then it’s for us to implement it. There’s tonnes of gravy,” he said, Ford’s pet word for waste.

via Ford makes layoffs sound like a certainty –

Many, including The Globe & Mail’s Marcus Gee, have pointed out that the $70 million in savings the mayor refers to is probably the same $70 million his office touted as “savings to the taxpayer” shortly after his first month in office. That figure included the roughly $64 million in revenue the City now must do without following the elimination of the Vehicle Registration Fee. Rob Ford, apparently, believes that eliminating government revenue counts as a “saving.”

To put it another way: this is the equivalent of taking a $100 bill, setting it on fire, and then calling that a “savings” on your monthly budget. Because now, I guess, you don’t have to worry about spending it.

The mayor was spinning these weird numbers — 80% and $70 million — as part of an attempt to to tiptoe around the idea of a 3% property tax increase for 2012. A reasonable property tax increase for the next year is actually the first sensible thing the mayor’s office has proposed in quite some time, so of course the Toronto Sun and others are already hammering him for it. Joe Warmington, in his column this weekend, accused Ford of replacing the Gravy Train with a Tax Train. (Seriously, enough with the damned trains.)

Which brings me back to this familiar refrain: property taxes don’t work like other taxes, in that they don’t grow automatically with inflation. A 3% property tax increase this year is in line with inflation — especially considering the freeze last year –, and really shouldn’t be seen as any kind of tax grab. Favouring layoffs over a fiscally-responsible move to keep the city’s property tax revenues in line with inflation is dangerous and short-sighted fiscal policy.

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