Mar 12

Rob Ford’s Toronto has a revenue problem

Days after his landslide victory in the October 2010 election, mayor-elect Rob Ford returned to the AM radio station that had launched his political career into the stratosphere. With his electoral triumph still fresh, he told John Oakley — Ford calls him Johnny — about his ambitious plans for the city, starting with the immediate cancellation of the $60-a-year vehicle registration tax.

When Oakley asked how Ford planned to make up the revenue that would be lost after killing the tax, the new mayor was nonchalant. “It’s only $40 million,” he said. “There’s more than enough money. We have a major spending problem at City Hall, not a revenue problem.”

A lot has changed since then. Less than eighteen months removed from those comments, Ford faces a new reality: one where he wants things he can’t pay for. To deliver the subways he’s been promising, Rob Ford has got to deal with a revenue problem all his own.

And, funnily enough, he’s actually looking at things like a revived vehicle registration tax as a way to solve it.

The Globe & Mail’s Kelly Grant & Elizabeth Church:

It remains unclear how Mr. Ford intends to finance his subway plan without relying on road tolls and other new sources of revenue that he has adamantly opposed in the past. Several councillors confirmed that in private meetings the mayor has even floated the option of bringing back the vehicle-registration tax – and jacking up the annual fee to between $80 and $100 from the $60 charge that was killed last year.

Councillor Mary-Margaret McMahon said Mr. Ford mentioned a VRT of between $80 and $100 as he ticked off a list of possible revenue tools, including road tolls and parking levies, during a meeting last week with her and fellow centrist councillor Ana Bailao.

via After meeting developers, Ford claims unanimous support for subways | Globe & Mail.

This news follows a Globe editorial last week wherein the mayor — writing under his own byline — expressed initial support for a new tax on parking across the city. “According to KPMG, a modest parking levy could generate more than $90-million annually,” he wrote. “That would fund a public-private partnership model to build the Sheppard subway and generate ongoing revenue for future subway expansion.”

Looking closely, the mayor’s numbers are totally out of whack. A report released by the Toronto Parking Authority in 2007 pegged revenues for a city-wide annual levy of $25 applied to all off-street commercial parking spaces at about $23 million. A $100 levy applied only to parking spaces downtown would bring in even less: just $7.5 million. To generate the kind of dollars KPMG and the mayor are talking about — and, yes, you need those kinds of dollars to pay for expensive capital projects like subways — you’d be looking at a per-space levy of closer to $100 per year charged at all commercial properties across the city. (And that’s not even taking into account the displacement factor — commercial businesses would immediately slash the size of their parking lots in response to a new tax.)

In addition, the existence of new revenues doesn’t magically make the idea of subways on Sheppard and Finch any more sensible from a planning perspective. If Ford really wants to justify these projects, he needs to go beyond just raising the capital money and also provide a strategy for financing long-term operational and maintenance costs. Cutting bus routes to subsidize empty subways is not a strategy.

He also needs to tell the people in North York & Scarborough that their neighbourhoods will need to change to accommodate dozens of 40-story condo towers.

But I don’t want to sound like I’m down on the idea. That Rob Ford is actually having these kinds of conversations about revenue tools is monumentally good news. This is a major turning point for the mayor and for Toronto. Under a conservative regime, the city as a whole may finally be coming to terms with the fact that the budget process has been seriously constrained by limited revenue sources since amalgamation.

Former budget chief Shelley Carroll has been pointing out the need for new revenue drivers — including a sales tax — for years. It’s a relief that Ford-allies like Councillor Norm Kelly and the mayor himself are starting to come around to the idea.

Here comes the sun

But wait. The Toronto Sun editorial board:

The problem with new taxes is that they have a way of growing like topsy.

Within days of Ford floating his $90 million-a-year parking tax, key Ford council ally Norm Kelly was pitching a 0.5% Toronto sales tax to raise $250 million annually for new subways.

We can’t think of anything more off brand for Ford and his allies to be running up the flagpole than a new tax.

What about all that private sector enthusiasm for the Sheppard subway Ford’s been talking about?

What about the city living within its means?

via Ford should bury subway tax idea | Toronto Sun.

Oh, right. We can’t ignore this truth: Ford Nation hates taxes and fees. Sure, they’re also the ones being most vociferous about their demands for subways instead of cheaper alternatives, but can their collective desire for underground transit trump the anti-tax sentiment that was at the core of the mayor’s election campaign?

Early indicators say no.

So far, Ford hasn’t publicly endorsed any new revenues aside from the single mention of a parking levy in his Globe editorial. And even that was kind of hand-waved away in the next paragraph: “Some partnership models don’t require any taxpayer funding in the first few years,” he wrote.

Ford is at a tough political crossroads with the transit file, and I’m worried he’s likely to retreat. Without the bedrock support provided to him by outlets like the Toronto Sun and AM radio, the mayor’s bound to start feeling pretty lonely. On the other hand, these kinds of compromises and face-saving moves are the only workable strategy Ford’s got if he wants to continue to drive the agenda at council.

Council will be revisiting the idea of transit in the Sheppard corridor on March 15. The lead-up to that meeting is critical. If Rob Ford is serious about his plan for transit, he needs to make a clear public statement in support of new revenue tools. No weasel words, no call for studies, no vague requests to the province: if Rob Ford really wants underground transit, he has to tell us he wants new taxes and tolls.


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.

Sep 11

Six Years of Budget Balancing Strategies: Rob Ford’s 2012 approach presents false choice

For the last six years, City Council has dealt with each budget shortfall with a mixture of surplus funds, new revenue projections, property tax increases, investment income and spending cuts/efficiencies. The 2012 approach under Mayor Rob Ford has been different.

Update: I’ve made a minor edit to the chart above to clarify how the implementation of the Land Transfer Tax & Vehicle Registration Tax changed the city’s financial situation. Quick summary: in 2008, both new taxes combined to take about $175 million in budget pressure off the city’s books. That new money was folded into expected revenues for future years, but LTT revenues tend to surpass staff estimates, resulting in extra cash in 2009, 2010 and especially 2011.

Through this Core Service Review process, the (growing) group of councillors opposed to Mayor Rob Ford’s fiscal strategy has continuously complained about a lack of information. While Budget Chief Mike Del Grande and assorted hangers-on have been quick to cite a figure of $774 million as the opening “pressure” for 2012, they’ve been less forthcoming with revenue figures that will significantly reduce that pressure.

Increased revenues from the Land Transfer Tax in 2011 alone look to total almost $80 million. And remaining surplus dollars from the 2010 and 2011 budget years could total another $100 million or more. Add in potential investment revenues, dividends from Toronto Hydro, assessment growth and other miscellaneous revenue lines and that big scary $774 million figure looks to drop down to something a lot more manageable.

The chart above reveals why this revenue information is so critical: each year, that opening pressure figure — which, it should be noted, was bigger in 2010 than it is this year — is brought down through a variety of strategies. Yes, there are spending cuts and efficiencies — Rob Ford’s favourite things — but also other revenues. Each year — until this one — the budget has been balanced without apocalyptic talk of slashing childcare, closing libraries and decimating public services or else raising property taxes by 35%.

That’s a false choice. It’s one that ignores the balancing strategies used over the past five years that have kept the city moving forward.

A note on sustainability

Critics would point to the chart above and say that the budget balancing strategies employed by Mayor David Miller, Budget Chief Shelley Carroll and the rest of the the left on council were largely unsustainable, short-term fixes, relying too heavily on reserves and other one-time funding sources.

And, for the most part, that’s true.

That said, if you believe — as even right-leaning councillors like Giorgio Mammoliti and Doug Ford seem to these days — that the city’s structural deficit is due in part to the province, who reneged on its responsibilities for supporting things like transit, child care and welfare, then one-time strategies tend to be the best Toronto can hope for these days. Unless the province comes to the table and commits to uploading more transit costs, a truly sustainable 2012 budget — one that doesn’t completely destroy the kind of public services that contribute to the economic viability of our city — is nearly impossible to achieve.

An Alternate Path

That doesn’t mean, however, that there aren’t paths Toronto can take toward fiscal independence.

  • A service review process and efficiency study — like the one we’ve just been through — was a good idea, but the timeline needed to be longer. Set annual goals to increase across-the-board efficiency and work with management to achieve them. You’ll save more money this way than you will with layoffs.
  • Set a long-term path forward for residential and commercial property tax rates. A multi-year strategy to put the average residential tax levy on par with, say, Markham would bring in vastly more revenue. Commercial rates should continue to decrease relative to residential. Review tax increase deferral and cancellation policies for seniors and disabled residents to ensure we’re not kicking anyone out on the street.
  • Consult with Metrolinx on their upcoming revenue strategy to ensure that a fair percentage of revenue from road tolls — an inevitability in this province — go toward transit operating costs, in addition to capital.
  • Review parking rates and increase them in downtown, high demand areas. Think like the private sector.
  • Look at new revenue sources, including a City of Toronto sales tax. Big cities across the world have one, and they’re not dying because of it. We keep hearing about the necessity of hard choices: here’s one.

The key is to think long-term and not to rush toward slash-and-burn fixes. More than any other level of government, municipal public services are directly tied to economic success. We can’t afford to risk that.

Aug 11

Ford For Toronto on NewsTalk 1010

Councillor Josh Matlow’s debuted his new radio show “The City” on Sunday, airing right in the middle of your dial on NewsTalk 1010. He was gracious enough to ask me to stop by for a quick segment to discuss my City Council Scorecard. These four minutes — which I shared with Matlow, Giorgio Mammoliti and Shelley Carroll — mark my radio debut. I think it went okay.

Matt Elliott on “The City” "Matt Elliott on “The City”"

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Matlow’s show is certainly worth a listen. He plans to have two councillors on with him every week, discussing a mix of city-wide issues and local stories. Next week’s show will see budget chief Mike Del Grande on with Sarah Doucette. “The City” airs live every Sunday from 1 to 3 p.m., or you can download the podcast.

May 11

Council moves to take out the trash after 32-13 vote

[blackbirdpie url=”http://twitter.com/TOMayorFord/status/70644442498998274″]

The Toronto Star’s David Rider and Paul Moloney, whose article is accompanied by a great picture:

Mayor Rob Ford has won his biggest victory since storming into office, setting the stage for a new era of privatization with a garbage contract that slashes 300 unionized city jobs.

“We’re getting this city turned around,” Ford crowed Tuesday night after council voted 32-13 to start a bidding process that, if it unfolds as predicted, could see a private waste hauler collect garbage from 165,000 households between Yonge St. and Etobicoke’s eastern edge.

via Toronto votes to contract out garbage pickup – thestar.com.

Ford’s spinning this as a hard-won victory for his administration, but I’m not sure I buy it. What happened tonight was not a vote to contract out garbage collection, but rather a step towards receiving quotes from qualified bidders. Council will have another opportunity to review and debate before awarding the contract for private delivery of service sometime in 2012.

The proposed process was always my biggest problem with this item, so I’m happy to see that Ford and his allies made a concession on this one.

In addition to that, Team Ford were also on the losing end of six votes relating to amendments on the item, including:

  • A recommendation by Josh Matlow that would see the City manager provide annual progress reports relating to the contract
  • A recommendation by Matlow that staff not accept any bid from the private sector company that recently hired former General Manager of Solid Waste Management for the City of Toronto, Geoff Rathbone
  • A pair of recommendations by Matlow that that require any bidder to meet or exceed existing and future diversion targets for solid waste, and to essentially guarantee a minimum level of savings
  • A recommendation from Josh Colle that the City ask the Auditor General to perform a post-implementation audit on the awarded contract
  • A recommendation from Ana Bailão that will require the City manager to “conduct an independent review of both the bid/contract numbers and the cost for identical services provided by the City”

Council also ended up deadlocked, tied 22-22, on three other amendment votes. Ford’s whip proved to be less effective than ever tonight, which is certainly something that can be seen as a victory for his opponents.

Of course, the vote that mattered wasn’t even close. I feel that most councillors — especially suburban councillors — could not ignore the fact that contracting out garbage is a massively popular idea with many people in this city. In addition, now that the contract will return to council, there will be another chance to review the numbers and make a more informed decision. (I suspect this is why councillors like Shelley Carroll and Raymond Cho ended up voting in favour.)

So what happens next? Seemingly not a whole lot, at least for a while. The union will hope that the bids that come in don’t show savings at the level the mayor anticipates — and some of the amendments passed today will make savings challenging –, while Ford and his allies will continue to not really care about the numbers, because for them this is primarily about revenge.

May 11

Carroll for Toronto

At Spacing, Jonathan Goldsbie has a hell of an interview with Councillor Shelley Carroll. It’s the kind of extended, in-depth interview I wish we’d see more often from local politicians. Really really good stuff, explaining why she didn’t end up in last year’s mayoral race:

“In hindsight, its easier to say why the hell didnt you run, you see how easy it would have been.  But when the decision was made, it was a much more crowded field.  When I was making the decision, Adam was in with the prominent Bay Street–organizer supporters.  Joe was gonna have the support of the NDP.  And George was going to have the Liberals.  By the time I announced I wasnt gonna run, Rob was gonna have his big party.  Its easy in hindsight, Look what a bad campaign George ran.  But in January, he had so many prominent resources that no one suspected he would run a campaign that was so weak.  That early on, he had so many people signed on to work for him that were known to run good campaigns and that we were about to see a brilliant campaign…

via Why Shelley Carroll Didn’t Run for Mayor « Spacing Toronto.

There are so many “what ifs” surrounding the 2010 mayoral race. What if the garbage strike hadn’t happened? What if Adam Giambrone had just been honest about his love life? What if Darcy Allan Sheppard hadn’t been hit by a car? What if John Tory hadn’t discovered a love for A.M. radio?

It’s fun to think about — and a campaign that pitted, say, David Miller versus George Smitherman, or Shelley Carroll versus John Tory, would have made for far better debates than what we did get — but I think I’m coming around to seeing the result of the 2010 as potentially a long-term positive thing for the City of Toronto. I’m not as optimistic as Dave Meslin, but I’m hopeful that Rob Ford’s still-seems-inevitable flameout will galvanize the voters of the city, underscoring the importance of a committed, progressive leader with a measured, long-term civic vision.

Come 2014, Shelley Carroll could be that leader.

Apr 11

City Hall Secrecy

The Toronto Sun’s Don Peat reports on a funny exchange between Gord Perks and city staff after he and Shelley Carroll were ejected from a media briefing relating to today’s garbage announcement. Apparently councillors were allowed to send a staffer, but were not permitted to attend themselves:

[City spokesperson Jackie] DeSouza and [general manger of Solid Waste Services Geoff] Rathbone then went to talk privately. When they came back, DeSouza said if Perks stayed, they would have to call off the briefing.

“It’s not fair that we told other councillors that they can’t come,” she said.

Perks agreed, partly.

“No, you’re right, it’s not fair you told councillors that they can’t come,” he said.

via Councillors booted from garbage briefing | Toronto & GTA | News | Toronto Sun.

It’s a weird situation — shouldn’t councillors be briefed before the media?

Mar 11

Finding waste: Hurry up please it’s time

David Rider:

The City of Toronto is preparing to unleash pricey management consultants on all departments and agencies, with orders to uncover waste and identify city services ripe for “potential reductions and discontinuation.”

Executive committee is expected to authorize the reviews Monday, kicking off months of painful deliberations to find $775 million in savings and revenue to balance the 2012 operating budget.

via Team Ford set to give go-ahead to gravy-sniffing consultants – thestar.com.

Tomorrow the Executive Committee will consider EX4.10, a report on the 2012 budget process. This represents basically everything you’ve been hearing about when people mention “2012” and all the terrible things that come with it. In brief: the city will spend three million dollars on consultants, who will identify areas where the city can save money. Presumably they will find enough in cuts to shave 774 million dollars off the city’s operating budget, as that’s the  amount of pressure the city faces next year. The City of Toronto must balance its operating budget and cannot carry a defecit.

Why this is harder than anyone will admit: read this.

Here are the things that the city spends a significant amount of its revenues on: Police Services, TTC, Debt Charges, Fire Services, Shelter & Housing, Parks & Rec. Those would be your “first tier” — the big-ticket items. Then you have Employment & Social Services, Transportation Services, and the Toronto Library. Beyond that, you get into small-ticket items like community partnerships (ie. grants) — these will be cut, but it will be for ideological reasons more than anything else. People will claim that governments simply shouldn’t be supporting, for example, an arts program, when “it can’t afford it.”

Yes, there is a lot of room for efficiencies in the programs offered by the City. Finding such efficiencies should be an ongoing project. But you’re not going to find enough efficiencies to dig your way out of this hole. This will be about taking a long, hard look at everything the city offers and deciding if something can be eliminated or drastically cut.

This will be amount making city services fit into the budget, as opposed to making a budget that fits city services.

David Nickle talked to Shelley Carroll, and she put it like this:

Don Valley East Councillor Shelley Carroll was budget chief under Mayor David Miller. She said she supports the planned review, but was skeptical that council would have the stomach to actually implement the service cuts and realignments that would be necessary to find the quarter-billion dollars in savings.

“Councillors defend – we’re great at defending,” she said. “And if we’re going to do this on the council chamber floor on Channel 10, we’re just going to defend the heck out of everything.”

Carroll said councillors need to meet and focus in on areas where they’re all willing to make cuts.

“We need to do this so we know what the councillors’ no-go sacred cows are,” she said.

“If we find one, then we need to know where else you want to look to find efficiencies.”

via InsideToronto Article: Former budget chief skeptical of mayor’s savings plan

She knows, of course, that most of the operating budget is made up of either mandated programs or “no-go sacred cows.” It’s very challenging to fill this hole without killing a sacred cow. (I won’t rule out, though, that they may pull a rabbit out of their hat that will balance 2012 and shift pressure to 2013. It’s happened before.)

Keeping to the same pace as the 2011 budget process, this stuff will happen very very quickly over the summer. From the report, here’s the schedule we’re looking at:

At least it won’t be boring.