Happy anniversary, everybody.
We’ve made it through the first year of this council term. Which means it’s almost time to start gearing up for election season in 2014. But before we head down that fun and winding road, there’s the matter of this 2012 budget. It’s big, it’s brash, and it’s being pushed by a mayor that has faced a first year in office that we’ll charitably call ‘challenging.’
Like with most things related to Rob Ford, his 2012 budget is a mixture of things that make no sense, things that make some sense, and things that are so far removed from the very concept of ‘sense’ that you’d be forgiven for thinking this is all part of a dream sequence.
Why shouldn’t I support this budget?
There’s lots of little reasons — particularly if you do a line-by-line analysis and start asking questions like, “on what planet does it make sense to cut the Hardship Fund?” — but two that stand out more than any other.
First, it’s completely unnecessary. The Grid’s Edward Keenan laid things out for us last week when he wrote that “dollar-for-dollar, every single cut in the 2012 operating budget was made necessary by Rob Ford’s 2011 tax cuts.” For all Ford’s bluster about saving taxpayer money and rebuilding a solid fiscal foundation, the only major “problem” fixed by this new budget is the one caused by the $100 million hole council dug for itself last year. The city’s structural deficit — a real, pressing budgetary problem that’s been facing the city since amalgamation — was immediately sidelined early last year by the mayor’s push to immediately cut revenues from the city’s budget with no plan for how to offset those losses.
Second, even if you buy into the notion that it’s high time for austerity in Toronto, this isn’t a budget that hits any of the right notes. There’s no centrepiece, no big idea, no notion of direction beyond this coming year. It’s a sneaky grab-bag of cuts — many of them admittedly minor — to various departments. It seems to exist both to convince voters that Rob Ford’s not the program-cutting butcher he’s been portrayed as and to bolster the notion that he can “fix” the city’s budget problem. The end result is a confused message: yes, we’re apparently “rebuilding Toronto’s fiscal foundation” but, well, why? Absent an operating deficit to slay or a real plan to eliminate debt, what exactly are we doing this for?
But isn’t it important to stop the city’s out-of-control spending?
If the city had an out-of-control spending problem under Mayor David Miller (and it really didn’t), it would seem that same problem has continued with Mayor Rob Ford. For each of the previous eight budget years, the net operating budget — the part paid for by property tax dollars — has gone up by an average of about $100 million per year.
Rob Ford’s 2012 budget continues this trend almost exactly, adding $98.3 million to the net operating budget for 2012. The net budget is set to grow at the exact same rate under this council as it pretty well always has.
But Rob Ford’s budget is the first since amalgamation to shrink, year-over-year. That’s a big deal, isn’t it?
Not particularly. What we’re really seeing with the gross operating budget, which did indeed decline by $52 million year-over-year, is a simple demonstration of what happens to your budget when you stop doing stuff. Yes, if you cut services you will, in fact, save money.
But the real issue is that the mayor has done things backwards. Starting with an edict to decrease the city’s gross operating budget ignores the realities of budgeting and forces staff to make odd recommendations, like cutting cost-shared services — where the city tends to see more benefit than what they put in — or programs that are funded via user fees or other revenues.
There’s also the simple matter of the 2011 operating surplus. As the Toronto Star’s Robyn Doolittle pointed out last week, if this administration would invest about $50 million of the at least $139 million left over from 2011 into the budget, they’d be able to avoid virtually all the major service cuts on the table. (They’d also have some left over to rebuild the city’s reserves.) But by doing that, Rob Ford would have a 2012 budget that is slightly bigger than his 2011 budget, which would eliminate what is sure to be his favourite talking point over the next year.
So on one hand, you’ve got the biggest rollback of TTC service since amalgamation, pool and park closures and sizeable cuts to social programs. On the other, you’ve got the ability to demonstrate on a chart that gross spending declined year-over-year. The mayor has chosen the latter.
Surely you’re not advocating spending the 2011 surplus in 2012! That’s one-time money!
Council used $81 million of surplus money to balance the 2006 budget. They used $132 million in 2007. In the years after, they used anywhere from $85 million to $346 million.
Toronto doesn’t have unexpected surpluses. Everyone expects these surpluses. The only people who don’t are scaremongering councillors who like to prattle on about $774 million figures that are disputed by their own budget estimates.
The wisdom of using prior-year surpluses to balance the budget can be debated — I can see an argument that says we’d be better to put that money toward capital projects and debt payments — but it is a viable strategy to balance the budget while preserving services.
What about other strategies?
If we really are serious about no longer entertaining the notion of using prior-year surplus money to balance the budget, it’s important to note that, thanks to measures like the Land Transfer Tax and a city-wide continuous improvement plan, we’re not too far off from a balanced budget that would maintain existing TTC service levels and reverse virtually all service cuts on the table.
Here’s what we need to do: raise TTC fares by another nickel beyond the ten cents planned for January 2012, and increase the total amount brought in by property taxes by another couple of percentage points. We’re that close.