Budget Chief No

As we head into today’s abbreviated budget committee meeting with news of a $90 million surplus for the first 3 months of 2012, Budget Chief Mike Del Grande announces what any good, prudent, sane fiscal manager would. Hey, everybody! It’s party time! Let’s roll us back some sources of revenue. Woo-hoo!!

Or, as Elizabeth Church in the Globe and Mail phrases it: “He [budget chief] plans to push for a reduction of the land transfer tax in 5-per-cent increments beginning next year.”

Huh.

What?

Could you elaborate a little further, Mr. Budget Chief?

“He [budget chief] plans to push for a reduction of the land transfer tax in 5-per-cent increments beginning next year, arguing that the city cannot continue to rely on a revenue source that is tied to the fortunes of the real estate market…Mr. Del Grande says the city’s continued reliance on the tax will leave a ‘massive shortfall’ in its budget when the real estate market cools. ‘The land transfer tax is giving us a false sense of security’.”

O… K… Let me see if I follow the budget chief – who is a chartered accountant, don’t you know – follow his logic here. Because Toronto is experiencing a particularly hot real estate market, despite all the fear-mongering that the land transfer tax would kill people’s ability to buy a house, and is thus generating higher than expected revenues for city coffers, we need to start eliminating the source of revenue in order to wean ourselves off the LTT bounty in preparation for the time when we’re making less when the market cools? Sort of a voluntary reduction before the inevitable enforced one sets in?

Hmmm…

We really need to question Budget Chief Del Grande’s motivations. Or his competency.

Regardless of your position in life, whether a public sector budget chief, a private sector financial controller, an individual homeowner, in gazing into the future and spying a possible economic downturn on the horizon, who reacts with the suggestion to cut revenues? Batten down the hatches everyone! We need to start making less money now in order to be used to making less money later!

It makes no sense.

Don’t believe me?

Ask the city manager, Joe Pennachetti, himself a chartered accountant although, evidently, he secured his credentials at an entirely different school (of thought). In a talk delivered a couple weeks ago at the Munk School’s Institute on Municipal Finance and Governance and one we wrote about here and here, and Matt Elliott wrote here (yes, I do think it’s an important enough point to flog over and over until everyone knows it by rote), Mr. Pennachetti suggested that, while there were still efficiencies to be found, it was revenue generation that we needed to be talking about going forward. City building, whether infrastructure, transit, couldn’t be done through cuts or further efficiencies. Toronto, like every other city in this province, country, continent, needs new sources of revenue.

Of course, city building is not part of our current budget chief’s vernacular. I don’t think it too off the mark to suggest he’s more of the Grover Norquist/starve the beast type of politician. Taxation is bad. Therefore government spending is bad. Widows and orphans be damned.

Only hardcore right wing ideologues would suggest that, in this age of austerity, government look to reduce revenues.

Even if the budget chief demanded that any surplus be used to pay down capital debt, he’d gain some traction as trying to have a reasonable argument although not much of one. The city’s debt level is just fine, thank you very much. Credit rating agency Moody’s thinks so. The city manager thinks so (with one caveat: our social housing repair backlog). Any attempt to compare our situation to that of Greece automatically disqualifies you as a serious participant in this discussion.

Instead, Budget Chief Del Grande only raises the spectre of our capital investment debt to argue against both government revenue and spending. This year it’s: “Councillors who want to spend the surplus are forgetting the huge capital costs facing the city,” he [Del Grande] said, “including the multimillion-dollar tab for refurbishing the crumbling Gardiner Expressway.” Last year we had to cut services and programs in order to pay down the debt.

The budget chief needs to start coming clean with us and simply admit that he doesn’t think government should be in the business of governing. That way, we could cease pretending to have a rational debate on this point with him and get on with what we really should be discussing. Mike Del Grande’s unfitness to be overseeing our city’s finances.

fit of piquely submitted by Cityslikr

13 Responses to Budget Chief No

  1. Mark says:

    Del Grande is talking utter nonsense. If our capital repairs debt is so bad, then why cut revenue? Why not use the windfall from hot real estate market and LTT to make a dent in road repairs and TTC expansion ie. invest in the city. It is just too painful to read him twisting into illogical knots.

  2. astrida says:

    Wouldn’t it be great if those who so obviously don’t feel like governing just packed up and left office officially, so that we could put their salaries to some practical use and stop wasting so much time and energy making comments on their illogical — or worse — actions?

  3. Not only is Del Grande a Tea Party-style ideologue, clearly he isn’t smart enough to realize he contradicts himself.
    The city needs to spend money on infrastructure repairs and expansions (such as the Gardine, which he himself brought up). However, starving the beast, so they can all feel happier about a few extra bucks staying in their own pockets, removes the city’s ability to perform these repairs.

    Starve the beast, and the beast dies. Newsflash, I know.

    It used to be that Conservatives and Liberals agreed that basic infrastructure needs for a city are vital both for economic growth, that holiest of holies to Conservatives, and for social well-being.

    Now, these Tea Partiers are willing to sacrifice both economic growth and social well-being for the sake of a few bucks kept in their pockets.

  4. Sonny says:

    I read that it was $70.3 million for the first 3 months. I was the only deputant to predict an over “$100 million surplus for 2012″ so they wouldn’t have to cut anything. This was based on 132 buildings going up; which Doucette corrected me that her recent(Dec.) number was 161 buildings in some starting stage! Del Grande is not a very accurate budgeter given he is a CA…

  5. Simon says:

    Where is all extra “taxes” people howled and wailed that they would be willing to pay at the budget deputations? 175 people actually made extra payments.

    • 99neon says:

      Chartered accountant or not, Del Grande is clearly incompetent. Best example is the council meeting in which he put forward a motion to consider instituting some new tax – then tried to withdraw that same motion the next day. Council defeated his motion to withdraw his motion which means that our tax-cutting budget chief unwittingly opened the door to future revenue generation through new taxes! What a dope!
      But really, this is all about getting re-elected. Del Grande and the other goons will have very little to recommend them next time they hit the campaign trail so if, at the very least, they can say they eliminated the LTT chances are some small number of idiots will vote for them.

    • astrida says:

      The ‘extra taxes’ option was such a cynical exercise, thrown at concerned and responsible citizens with utter contempt by Frances Nunziata, et al. — teeth bared and claws extended.

      I will happily contribute more to taxes when this city is being run by at least half-way responsible individuals, not this circus.

      By now it has become apparent that the mayor’s circle is shrinking, becoming increasingly irrelevant, but i will give them nothing extra to play games with. They have shown that they don’t deserve the seats they’re sitting in, elected or otherwise.

      • Simon says:

        The problem with the people saying that they would be willing to pay more but didn’t will be an argument that won’t work when the next budget is put together.

        At some point, the condo boom will end in TO and so will the surprise surpluses.

      • 99neon says:

        Astrida – you’re correct that the mayor’s circle is shrinking. That, in and of itself, is cause for optimism. But remember too that Ford still has a court date with Clayton Ruby in September that may mean his circle is smaller by one – the mayor himself.

      • astrida says:

        99neon — YES! (I have definitely not forgotten about that court date!)

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