Nov 11

Visualizing 2012: How to manufacture a budget crisis

“A smart budget,” the mayor called it. “A responsible budget.” But what we got this morning was anything but. Instead, Rob Ford finally produced evidence, under the guise of launching the City’s 2012 budget process, that the apocalyptic budget scenarios his administration has been spinning for the last year have been a waste of everyone’s time. Toronto isn’t Greece or any other bankruptcy-skirting nation. We’re simply a city that cut too much revenue last year, and now we’re using service cuts to make up the difference.

Standing behind a podium labeled with a “Rebuilding our Fiscal Foundation” sign, Ford introduced the messaging he’ll be using through the budget process and probably well into next year. It goes like this: we’re the first government in Toronto’s history to reduce the size of the operating budget year-over-year; we inherited this mess from the previous administration; and this is what the taxpayers want us to do.

His numbers, of course, don’t add up. Ford claimed that his team had found $355 million in savings “through our Core Service Review, service efficiencies and modest service adjustments.” But to get that number, he had to include budget reductions that came from things like restructuring debt payments and delaying capital financing. It also includes $28 million from a lowered forecast for employee compensation. So staff overestimated on a budget line, then reduced that estimate, and Rob Ford claims it as a savings to the taxpayer. Like magic. His claim of lowering the operating budget year-over-year is also dubious, as the net operating budget — the part funded by property taxes — still increased by almost $100 million. The reductions, then, come exclusively from areas funded by grants or user fees, like the TTC.

The reality, as displayed in the chart above, is that 2012 would have been one of the easiest-to-balance budgets in post-amalgamation Toronto’s history if not for a series of fiscal decisions made by the Ford administration. Had Council not approved a property tax “freeze” and the hasty elimination of the Vehicle Registration Tax, more than $100 million in annual revenue would be available to balance next year’s budget. If Ford would acknowledge that, with the Land Transfer Tax and other revenues, the City actually enjoys something of a structural surplus, some of the staff-estimated $139 million left over from the 2011 budget could justifiably be rolled over into 2012, preserving service at the TTC, the Toronto Public Library and other agencies and departments currently facing the budget axe.

Instead, Ford will continue down the same clumsy path he’s been on for the last year. The one where he tells us that an insurmountable budget gap — one he “inherited” from a government he was part of — requires cuts to service, despite a mountain of evidence to the contrary. Now that we have the numbers in front of us, the mayor’s rationale makes even less sense: taking even a small percentage of the surplus revenue generated by the Land Transfer Tax last year could, for example, eliminate the need for all the TTC cuts currently on the table.

It’s time to put all the phoney talk of the $774 million shortfall behind us, and wake up to the fiscal reality. The City has — and always has had — options beyond the budget axe. It’s the refusal to acknowledge these options that hurts the city the most.

Toronto’s Operating Budgets: A History of Balancing Strategies

With the release of today’s budget documents, I’ve updated the chart below from a previous post to include the staff recommended balancing strategy for 2012. The most striking difference is the lack of surplus dollars. Ford and Budget Chief Mike Del Grande aren’t eschewing the use of one-time funds to balance the budget, however: they’re taking a generous amount of reserve dollars for similar purposes.

City of Toronto Operating Budgets, 2006-2012 (Recommended)

Jul 11

The incredible shrinking budget gap

Here’s the story, as advanced by Councillor Gord Perks and reported this weekend by the Toronto Star: That $774 million budget gap we’re all freaking out about? The one that has us talking sincerely about de-flouridinating our drinking water and shutting down parks? The one that’s so severe that it’s led to the City’s Budget Chief carrying around a plastic State Farm-branded piggy bank that he pulls out and shakes whenever one of his colleagues starts talking about programs that might potentially require more City spending? Turns out it might not be a real figure.

In actuality, the real budget pressure for 2012 — thanks to remaining, recently-discovered 2010 surplus dollars and an anticipated surplus for 2011 — might be significantly less. Like $331 million less.

But if we’re not actually looking at three-quarters-of-a-billion-dollars of “budget pressure,” why does that figure keep coming up? The Star’s Paul Moloney explains:

Critics accuse the Ford administration of exaggerating the city’s money woes to cow citizens into going along with serious cuts.

“I think the mayor is trying to create a political climate that suggests that the City of Toronto government is broken,” said Councillor Gord Perks, a key budget figure in the old David Miller administration.

“The kind of damage that Rob Ford wants to do to services Torontonians rely on can only be achieved if he terrorizes the public into believing we need to do it,” Perks said.

via City budget gap exaggerated, critics say | Toronto Star.

At Toronto Life, John Michael McGrath links this kind of  manufactured-crisis strategy to Naomi Klein’s Shock Doctrine, a sentiment backed up by blogger Sol Chrom, who writes, “Whose interests are served by all this manufactured hysteria around the budget? Apocalyptic numbers and phrases get thrown around and amplified by the transmitters in the media, and soon the sense of crisis is so acute that the stage is set for extraordinary measures.”

Extraordinary measures. Like library closures. Like transit cuts. Like service cuts. You might remember that the Mayor’s Office actually justified their use of previous-term surplus funds to close the 2011 budget gap because it would  mean they had “unmasked the true financial condition for all to see. The 2012 budget forecast reflects the true gap between the city’s revenues and spending habits.”

At The Grid, Ed Keenan contributes a great primer on how the city’s budget process works, and underscores that this year’s budget gap isn’t unique: the previous council dealt with initial shortfalls that were even larger and dealt with them without slash-and-burn service cuts:

[G]oing into the 2010 budget season, David Miller faced a projected budget shortfall of more than $800 million, and he managed not only to balance the budget without cutting any services at all, but to eventually show a huge surplus. So why is the somewhat smaller shortfall that Ford faces an emergency? Why would this, lesser crisis, require considering slashing whole government departments?

via From $350 million surplus to $774 million deficit in one Ford year? | The Grid TO.

But so what? Even if the budget gap is only the $443 million Perks says it could be, that’s still a huge number. And isn’t it time that we got our fiscal house in order and stop with these annual budget games? Shouldn’t Council’s left-wingers know better than to suggest we get through 2012 with yet another short-term, unsustainable fix?

John Lorinc is asking for a more proactive approach from Council’s Left. In his Spacing column this week, he calls on opposition councillors to lay out a “Plan B” budget, proposing an alternative to spending cuts instead of just criticizing the mayor and his allies. It’s not a bad sentiment, but he also adds this: “By the way, if a Plan B hinges on an unspecified Provincial bail-out, it automatically fails the smell test.”

Okay, yeah, it’s not likely that the McGuinty government — much less a prospective Hudak government in the fall — will be willing to cough up new subsidies to the City of Toronto when they’re facing a giant-sized debt and deficit all their own, but to ignore the role the province must play in righting amalgamated Toronto’s financial ship is not realistic. The City’s annual deficit became structural the day Mike Harris cut the provincial TTC operating and capital subsidies. Without a return to a fairer funding model — which will require strong intergovernmental advocacy efforts from the Mayor and Council — the only workable long-term Plan B-type solutions will have to involve politically toxic revenue drivers like a return to something like the Vehicle Registration Fee or even — horror! — a Municipal Sales Tax.

Jan 11

Lobbying from student groups led to car tax repeal, says Ford

I feel ridiculous even writing that headline, but there it is. A full-length interview with the mayor is as rare as a unicorn sighting these days, so this from the York University student newspaper is more interesting than it should be. It’s by reporter Pippin Lee, who probably got tired of hobbit jokes when she was younger:

“I’m not much older than the students – we’re a younger generation, and I understand the challenges you have,” said Ford. He pointed out that lobbying from the student population instigated his scrapping the $60 vehicle registration fee, that many student drivers made it clear to him they simply couldn’t afford the fee.

via North of Toronto, south of York–still in Ford country | Excalibur Publications.

Summary: our 41-year-old mayor understands youth, and heard from them en masse that a fee equivalent to the cost of one tank of gas was making driving unaffordable.

(Update: Turns out Pippin Lee is actually the photographer. The article is by Jacqueline Perlin. I’ve left my lame hobbit joke intact as a gift to future generations. But I do regret the error.)

Jan 11

Taxes make ‘for a healthier, better and more equitable city’

Andrew Ardizzi over at InsideToronto.com brings us a report of a budgt consultation meeting held in Ward 18 (repped by Ana Bailão, whose tilde seems to come and go) with this delightful bit of oratory from local resident Franz Hartmann:

Hartmann said Toronto has one of the lowest property tax rates in Ontario, and he enjoys paying them because it makes for a healthier, better, and more equitable city. The current budget proposal does not include a property tax increase for 2011.

“I personally have no problem paying more property tax if I know that woman over there will have a chance of having subsidized day care,” he said.

via InsideToronto Article: Subsidized day care, bus route changes highlighted at Ward 18 budget meeting.

He’s bang on, of course. But InsideToronto probably should have mentioned that Hartmann is also the Executive Director of the Toronto Environmental Alliance. (He’s either that or a turn-of-the-century German physicist.)

Interesting to see the media report on this kind of community perspective. They also quote a resident saying that scrapping the vehicle registration fee was ‘outrageous.’ It’s bizarro world. In a good way.

Jan 11

Respect for a certain kind of taxpayer

Chris Selley for the National Post, who I gather enjoys being a contrarian above all else, tries to put a positive spin on many of today’s budget-related announcements. Here he explains that the $60 per year cut to the personal vehicle tax is entirely unrelated to the $60 per year increase in transit costs for Metropass users:

Of course there are financial consequences to cutting the Personal Vehicle Tax, but the fare hike is no more a direct result of it than any other budgetary measure: cutting the tenant defence fund or the environment office in London, or closing the Toronto Public Libraries’ urban affairs branch at Metro Hall.

Selley is right, of course. That the vehicle registration tax numbers line up with the Metropass fare hike numbers is coincidental, a weird quirk in the budgetary process. The fare hike — which is still, I caution, unlikely to really happen — is instead a direct result of a 17 million dollar cut to the TTC’s annual operating subsidy. Which is a direct result of the need to constrain costs even further than would be necessary if not for the mayor’s pledge to freeze property taxes and, yes, cut the vehicle registration tax.

Everything is connected. What the fare hike and the VRT cut represent, taken together, is a statement of priorities. This is more important than that. Vehicles over transit. Respect for a certain kind of taxpayer.

Service cuts and fare increases are often necessary, especially in times of fiscal shortfall. What’s so frustrating about today’s budget is that Ford was presented with a fantastic starting point. Surpluses and provincial transfers, plus a modest property tax increase — something the mayor campaigned on — and, sure, some efficiencies, could have easily held the line. That would have given city departments, managers and council a year to discuss the mayor’s goal of budget reductions for 2012.

But that’s not what we got today. Too bad.

Jan 11

Now you downtowners can afford to drive!


via Ford ends personal vehicle tax – 680News.

Just in case you missed it: Ford held a press conference at a downtown Chrysler dealership early on New Year’s Day to promote the end of the vehicle registration fee.