Dec 11

Notes on Rob Ford’s budget, written as it starts to fall apart

The Toronto Star’s Royson James:

The budget committee meets Tuesday to vote on motions aimed at avoiding a showdown on kids’ programs. Will the torrent of complaints from Toronto residents derail the so-called “gravy train”? And is Ford on a course correction?

His council opponents are in a holding pattern. Both Gord Perks and Adam Vaughan said Monday they won’t table any budget changes until the mayor plays his hand and outlines his fixes.

“There’s no need to start making deals yet. We need the third-quarter report (on the surplus, assessment growth and investment incomes, for example), we need to see the changes from the budget committee and the executive committee,” Perks said.

When the budget deals are negotiated, expect a big push to save TTC routes earmarked for service reductions, and protection of the Wheel-Trans service for ambulatory dialysis patients.

“It’s the mayor’s budget. He doesn’t have the votes. He will have to fix it,” said Vaughan.

via James: Councillors push back against flawed budget | Toronto Star.

Rob Ford’s first real budget as mayor is gradually falling to pieces. Every indication is that the budget passed by council in February will look very different from the one Rob Ford first presented a few weeks back.

This will be a significant shift from the way things have traditionally been done. While there has always been a bit of public give-and-take with city budgets — a tweak here, a shift there — never before has a post-amalgamation mayor faced such strong opposition from council. Just as Ford has blazed a new trail by being a mayor who routinely and sometimes overwhelmingly loses council votes, this mayor will also break new ground should he prove to be a mayor who loses complete control of the budget narrative in February.

This is, of course, mostly a good thing, especially because the other alternative is going down a road where important programs get cut for essentially no reason. But there’s a ring of sadness around it. Because this is a time in Toronto where political energy and engaged residents should be focused on the way forward. On building and growing and making things great.

But instead, we’re actually having public arguments about whether the city should continue putting $600,000 per year toward cost-shared programs that provide breakfast for kids who need it. It’s hard not to feel like this whole process is, in the long-term, a big waste of our collective civic time.

We can’t solve systemic capital budget issues by nickel-and-diming the operating budget

Most of the rationale we’re hearing from the mayor and his allies surrounding the 2012 budget is overly-simplistic: we need to cut the budget because the budget is too big. But beyond that, I have heard a slightly more compelling narrative from the budget chief and former chief-of-staff Nick Kouvalis, who hung around for the last hour of this week’s episode of The City with Josh Matlow and expressed this view repeatedly.

To paraphrase, the rationale goes like this: we have to drastically cut the operating budget to increase our debt payments so we can then pay for capital projects and eliminate all our debt and then, I guess, enjoy a happy fiscally-conservative utopia.

There is, at least, some sense to this. Our debt payments have been mounting. We’ll spend $400 million of property tax revenues on debt payments and interest alone in 2012. Our capital obligations total a ridiculously huge number going forward,and very little of that total is nice-to-have items like new parks and arenas. Most of it is the cost of simply keeping things from falling over.

But, ultimately, trying to work our way out of a capital budget crunch by pruning the operating budget is a losing battle. It’s like trying to dig your way out of a deep hole with a spoon. Our capital budget problems aren’t self-made. Despite what some on council will try to tell you, David Miller didn’t push for that new streetcar order because he loved spending money: he did it because the only alternatives were an expensive and risky rebuild of the current streetcar fleet to extend their lives, or a move away from streetcars toward buses, which probably would have cost more in the long-term. (And rightly pissed off a lot of people, who still remember the last time the government tried to kill streetcars.)

In fact, the bulk of necessary spending over the next decade relates to costs associated with maintaining and (ever so slightly) expanding the TTC. We’re facing these problems entirely because the province shirked its responsibilities and has been slow to come back to them.

And to those who will say provincial funding is impossible because the Ontario government is facing its own significant debt and deficit crisis, you’re letting them off the hook too easily. The province has budgeting techniques and revenue tools at its disposal that the city can only dream of. And transit is not one of those things that the province gets to defund when the economy goes bad. Because transit is a critical part of that economy.

But, still, maybe you’re cynical enough to believe that the provincial government will never understand that, and never come to the table. Even then, we’re still facing an issue that cannot be solved by shaving dollars off the operating budget and plowing the savings into capital. We can’t  fund the long-term capital needs of one of North America’s largest transit systems solely on a property tax base that brings in about 4 billion a year. It doesn’t work and it will never work. If the province won’t play ball, then we need to start looking at new revenues — road tolls and sales taxes — that can pay for the kind of transit Toronto needs.

Nov 11

Budget 2012: A failure on two levels before it’s even launched

The Toronto Star’s Robyn Doolittle has a terrific feature in today’s paper, providing background on the two-month-long budget odyssey you and I and Toronto City Council are about to embark on.

She leads with a year-old anecdote involving an unnamed source that I’m going to guess was Nick Kouvalis:

Sitting in an uptown restaurant 11 months ago, a top official in Mayor Rob Ford’s inner fold revealed the master plan for his term.

The 2011 budget would be pain-free. The mayor would drain hundreds of millions in surplus and reserve funding left by David Miller and get three huge payoffs for it. One, Ford could deliver an unexpected property tax freeze to curry favour with the voters who just put him in office. Two, he could fill the structural deficit gap without making a single significant service cut. And three — the most important — it would remove the safety net.

via Toronto News: 2012 the doomsday budget? Not so much – thestar.com.

This isn’t surprising news. The talking points memo circulated to Ford-friendly councillors during last year’s budget debate laid it out pretty simply. “By applying all accumulated surpluses to the 2011 budget,” it read, “we 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.”

In other words, an irresponsible property tax freeze and short-term fiscal thinking in 2011 were a feature, not a bug. The idea was always to make the 2012 budget look daunting and insurmountable, in the hopes that a dire-looking situation would curry public support and the necessary council votes for an austerity-type agenda.

We purposely drained our savings account so we could spend the next year telling everyone how broke we are.

It’s becoming clear that this strategy failed on two levels.

First, despite (apparently sincere) attempts to encourage a very large opening shortfall for 2012, new revenues have crept onto the scene — their presence has been obvious for months, despite denials — and look to have helped bring that shortfall down. In reality, it’s likely to present far less of a challenge than some of the budgets that came across Shelley Carroll’s desk when she was budget chief.

Second, even if there was a fiscal crisis — one as bad as initially claimed — this administration has utterly failed to maintain the public support and the political capital they need to make big, sweeping, cost-saving moves. While some right-leaning and centrist councillors appeared to start the term thinking they could coast simply by hitching their wagon to the new guy in the mayor’s office, it’s becoming clear now that being branded a loyal member of Team Ford could have consequences as we start to approach the 2014 municipal election.

For proof, look no further than Councillor James Pasternak, who squeaked into office with a commanding 19% of the popular vote in his mostly suburban ward. He’s been a fairly hardline supporter of the mayor thus far — more than 80% of the time by my count — but now he’s telling the Toronto Star that he “will not support cuts to many of our social services and arts programs.”

Funny how things change.

What’s next

Don’t get too comfortable. There are still some significant items that could face the chopping block, including some potentially disastrous cuts to the TTC and the Community Partnership & Investment Program, in which the city contracts out cultural, social and recreational services to not-for-profit and community organizations. Small cuts this year can set up further cuts in coming years. Let’s watch close.

Another thing to watch: some in the mayor’s office may attempt to spin a relatively cuts-free 2012 budget as a victory for the mayor. They’ll call it vindication for his campaign pledge that he could cut the “gravy” and balance budgets without service cuts. They’ll say that the left-wing in this city was being premature and alarmist with their messaging over the summer. This will all be bullshit. It’s clear at this point that the mayor’s gambit to craft a 2012 budget in his own ideological image has, in large part, failed.

From here on out, it’s all about the mayor saving face after a very rough first year.

Aug 11

City Budget: This isn’t about austerity & four other notes

Note: A version of this post also made an appearance at OpenFile Toronto.

Some notes on the budget that continues to barrel toward us like a… — I’d say train, but I feel like we’ve squeezed all the life out of that analogy. In any case, it’s coming for us, this budget, and there is no escape.

(1) The 2012 budget isn’t about austerity

Ex-Ford Chief of Staff Nick Kouvalis took to his Twitter account this week, dropping a bunch of references to the need for austerity in the light of that recent thing where the United States — temporarily, we hope! — tanked the world economy. “Economies, banks are failing — time for austerity” he wrote, presumably sincerely, when asked by poverty activist Ken Wood about library cuts. “Spending must be curbed, reductions made.”

But while there might be an argument to be made for austerity at the provincial and federal levels, that strategy makes almost zero sense at the municipal levels. The other orders of government make their revenue through taxes that are very much dependent on economic conditions — when people lose their jobs, income tax revenues decline; when people stop spending, sales tax revenues decline — but Toronto derives the majority (54%) of its revenue from property taxes and user fees. We’re not in a position where we should cut services for a few years until the economy recovers as our revenues are, for the most part, not linked to overall economic performance.

Any talk that we should cut things like arts funding due to present economic troubles ignores that what we’re talking about here is a structural shortfall requiring structural change. These cuts will be, for all intents and purposes, permanent.

(2) The City’s debt is manageable

Everyone knows Toronto can’t run a deficit on its operating budget, but we do have significant capital debt. Charges related to that debt are the third biggest item on the average property tax bill. Looking beyond the simple fact that the City of Toronto has comparatively far less debt than other governments, however, there remains a critical difference between how the province and the federal government handle things and how we do things on the municipal level. And that difference is this: Toronto is actually paying down its debt.

Debt Charges (Interest Only) — Government Comparison

A fun chart comparing debt charges (interest only) as a percentage of overall operating budget. Toronto is the only government actively paying down its debts.Â

That chart (page 50) shows the relative health of the city’s indebtedness compared to other governments. It’s also worth noting that the City has some $20 billion in assets

The way the city handles things — we also have our own municipal debt ceiling, of sorts, capped at 15% of operating — is a departure from the expected status quo where governments tend to roll with interest-only payments, especially during times of austerity. Toronto’s problem is not so much the level of existing debt — which is manageable — but rather needed future capital spending projections, primarily relating to the TTC.

This is where a strong commitment from other levels of government is most required. Transit should be a major issue in the provincial election this fall, and Toronto City Council should be leading the charge.

(3) The City has not seen out of control spending

Another chart (page 59):

Comparison of spending increases: Federal vs. Provincial vs. Municipal

Comparison of spending increases, 1998 to 2010. (Not including debt charges which, as mentioned, the other governments tend not to make principal payments on.)

From 2003 to 2010, the City’s Net Operating Budget — the portion paid for by property taxes — increased from $2.9 billion to $3.6 billion. Or about $100 million per year. The budgetary magic of the David Miller era was pulling in some $500 million in transfers from the provincial government to fund (often provincially-mandated) programs and adding another half-billion in rate-supported programs. But even then, the city’s year-to-year spending increases still fell below the rate-of-growth for other levels of government.

(4) Budget Chief Mike Del Grande has finally come clean about surplus dollars

Councillor Del Grande made a surprise phone-in appearance on Josh Matlow’s new NewsTalk 1010 show on Sunday, and in doing so finally made reference to the fact that there will be significant surplus dollars and other revenues coming out of 2010 that could be applied to the 2011 budget. (These would probably total enough to bring the shortfall down to at the very least last year’s staff estimate of $530 million.)

But here’s the catch: Del Grande wants us to ignore the extra revenues behind the curtain, arguing that the City might need to use those surplus dollars to pay for buy-outs for staff under the program launched this summer. Which, in addition to seeming like a questionable use of funds, could make for a double barrelled shot to the face for residents who rely on city services: not only could they see funding for services reduced, the city is also in danger of prematurely shedding staff who play important and longstanding roles in successful service delivery.

(5) We could have avoided this

One of the first things Speaker Frances Nunziata did when she opened council’s debate on the 2011 budget was rule any mention of the 2012 budget as out of order. An audacious move for an administration that had touted their fiscal prowess and a sincere desire to get the city’s fiscal house in order. Any discussion of long-term planning was, apparently, not allowed.

It’s been noted again and again, but a simple combination of a small property tax increase in last year’s budget and a partial retention of the Vehicle Registration Tax would have resulted in very straightforward budget processes for both 2011 and 2012. This would have allowed the budget committee to focus on a long-term strategy for reducing the city’s annual structural shortfall through a combination of further monetization of city assets, good faith intergovernmental negotiations and some efficiencies — and, yes, potentially cuts — to programs and services.

That’s the part that’s so hard-to-stomach about this whole process. It didn’t have to be this way. But now our city faces an utterly avoidable scenario shaped by a mayor that seemingly harbours a naked ambition to gut services.

Apr 11

One Ford silent on election issues as other canvasses for Tories

The mayor actually spoke to reporters on Friday. About issues beyond graffiti removal! He didn’t say much, but I thought his response on the federal election question was interesting:

He continued to stay away from the federal election. He is not endorsing any party, but will help out Conservative finance minister Jim Flaherty, a long-time family friend. Asked what parties could do to woo Toronto voters, Mr. Ford was reticent. “I’m not going to pass the buck. I’m responsible for our city and I’m not going to blame the provincial or federal government. Whatever they can do, whatever they think is the appropriate measure, I appreciate it.”

via Ford takes questions on Gordon Chong, councillor expenses | Posted Toronto | National Post.

He’s not going to blame the provincial government. But just over a month ago he did blame the provincial government. He asked them for more money for city programs. Then he threatened to unleash ‘Ford Nation’ if they didn’t give him what he wanted. Does he not remember that?

To be fair, he has been very consistent in giving the federal government a pass when it comes to city issues. He voted against condemning federal cuts to immigration services. He’s remained silent despite this current election atmosphere being a great time for municipal leaders to make their case for urban issues. And today he voted against receiving Adam Vaughan’s motion that the city ask the federal government to clarify compensation rules for shop owners who suffered damage during the G20 summit last summer.

While Ford isn’t getting actively involved in the election, his brother is. Both Nick Kouvalis and Rocco Rossi tweeted about Doug Ford canvassing for the Conservative Party in Toronto ridings this past weekend.

There’s absolutely nothing wrong with councillors supporting and campaigning for federal and provincial candidates, but Doug Ford’s incredibly close relationship with the mayor’s office works to betray his younger brother’s attempt to remain neutral.

Feb 11

Mayor’s office is in total disarray but believes itself incredibly effective

In what has become something of a tradition, some crazy-ass news broke from the mayor’s office late Friday. This one is a bit complicated, so let’s try to step through it together.

The National Post’s Natalie Alcoba:

It was late afternoon when news broke of an incident at City Hall that led Mayor Rob Ford’s outgoing chief of staff, Nick Kouvalis, to ask security to escort the mayor’s long time staffer Andrew Pask out of the building.

Before the workday was up, Mr. Kouvalis and Councillor Doug Ford, the mayor’s brother, marched down to the Press Gallery to “clarify” what happened on Jan. 21, insisting there is no discord in the Mayor’s office, while simultaneously declaring that a new plan for subways is almost finalized.

via Ford’s office holds meeting to ‘clarify’ incident with Nick Kouvalis | Posted Toronto | National Post.

Okay. So Nick Kouvalis, the mayor’s chief of staff and the guy who essentially got Rob Ford elected, is a total jerk, right? And I say that not in a disparaging way because I don’t think he aspires to be anything but a jerk. It’s a label that fits him. In any case, we learned a few weeks back (on a Friday afternoon) that Kouvalis would be stepping down from his role. According to others in the mayor’s office, this was both something that was and was not planned for some time.

So a footnote of Kouvalis’ leaving was that another guy, Andrew Pask, was also leaving. This didn’t really receive a lot of attention because Kouvalis was the bigger story.

But today news broke that Kouvalis actually called security and had them escort Pask out of the building after an altercation at a meeting. Keep in mind that Kouvalis is a man who was accused of uttering death threats against Essex MP Jeff Watson and once pushed a Ford supporter out of the way because the mayor wnated a Diet Coke. When news of this so-called “blow-up” was leaked, with the suggestion that it led to Kouvalis’ leaving, Doug Ford and Kouvalis himself called a press scrum to clarify things.

And clarify they did. Toronto Star blog The Goods has the audio of the conference, and it’s well-worth listening to. (Little moments, like the attempt to get everyone to go off-the-record in the middle of the scrum, and that the apparently semi-serious question as to where Sue-Ann Levy would be running for office, are great.)

Some choice quotes:

  • Doug Ford confirms the mayor’s approach to accountability by saying that it is “no one’s business what happens…in the Mayor’s office.”
  • Kouvalis makes the claim that this administration has done “done more than Miller did in seven years in a month-and-a-half.” Which seems to suggest that the last seven years amounted to less than the elimination of a sixty-dollar-per-year user fee, a bunch of bus route cuts and a single year tax freeze.
  • Doug Ford says, of Kouvalis, “Public record, he’s going to privatize garbage.” I really think he expects people to break into spontaneous applause every time he says this.
  • Kouvalis says that he would already be gone if not for the transit deal. In a curious turn-of-phrase, he says, “Transit City is alive and well and it’s going to be buried underground.” He may have just misspoken and meant to use the Ford-branded “Transportation City.”

In conclusion? Who the hell knows. But even diehard Ford supporters have to be feeling like maybe this isn’t the greatest example of efficient, well-run and customer service-oriented government.

Jan 11

Goodbye Kouvalis

Ford’s chief of staff and noted election shit-disturber Nick Kovualis is stepping down. Kelly Grant with the Globe reports:

Nick Kouvalis is planning to depart in three or four weeks for a new post within the administration leading the city’s efforts to contract out garbage services, according to Councillor Doug Ford, the Mayor’s brother.

“He’s going to be leaving as the chief of staff, but he will still be part of the team,” Mr. Ford said late Friday. “We’re going to get the subway done, we’re going to finish that deal and then he [Mr. Kouvalis] is going after the garbage.”

via Rob Ford’s chief of staff stepping down – The Globe and Mail.

It’s been played as amiable, but there sure were a lot of rumblings in December that the Fords were unhappy with Kouvalis and his passion for rambling on about how he totally duped the city into voting for a guy who can’t articulate words with four syllables or more.

Ultimately this probably doesn’t add up to much. Ford is established now. The only thing I’d note is that Kouvalis has been a big part of how Ford has managed to rein in his famous temper and avoid the gaffes that marked the early part of his political career. Kouvalis’ exit, which presumably means Doug will be calling more of the shots, could lead to a less disciplined and more free-wheeling Rob Ford.