“Now, there’s two answers. It’s either there’s corruption down at City Hall or there’s major incompetence at City Hall in budgeting. How do you just find a hundred million dollars?”
— Councillor Rob Ford, John Oakley show, March 2010.
Yeah, Mayor Rob Ford! How do you just find almost three hundred million dollars? Corruption or major incompetence? “It’s a great windfall,” claims Team Ford member, Councillor Denzil Minnan-Wong. “It’s a reflection of a new culture.”
So, surprise surpluses are hunky dory, a-OK, a sign of running a tight ship when they occur in part due to department, service and program cuts. But when there are revenue generating tools involved like property tax increases beyond the rate of inflation? That’s just corrupt incompetence, Johnny. Proof there’s a spending problem.
What I do think we can agree on, though, is that annual budget surpluses, no matter how they come about, cannot be classified as ‘one time savings’. Since municipal governments are legally prohibited from running operating budget deficits, yearly surpluses just come with the territory. As you’ve probably already heard, former mayor David Miller, that roguish, out of control tax-and-spender also delivered annual budget surpluses. In fact, in his last two terms, those surpluses were significantly higher than the one Mayor Ford is touting today. Anyone who insists on calling them ‘one time savings’ should no longer be considered an honest broker in this debate.
The 2011-12 budget surplus also should eliminate the use of the opening pressure number as a bogeyman to scare city council into submitting to the shrill call of arbitrary cutting. Remember last fall and early winter where the mayor and his allies ran around screaming $774 million? We’ve got to slash and burn our way through three-quarter of a billion dollars, folks! So tighten your belts and start throwing excess weight overboard. Women and children first.
By the time the actual budget debate got down to the nitty gritty in January that $774 million red stained hole had magically transformed into a $154 million surplus as it tends to do every year. The opening pressure is merely a starting point made up of all the expenditures the city expects to face in the upcoming budget year. None of the projected revenue streams have been factored in including things like the land transfer tax which has provided a comfortable cushion since its inception due to a continued hot property market in Toronto.
So ignore the man howling about the opening pressure. It’s a tactic meant to scare you. Like the person referring to annual budget surpluses as ‘one time savings’, they should be ignored and dismissed out of hand.
Because of the uncertainty of the exact amount of a surplus in any given year – an uncertainty exacerbated, I believe, by the Ford administration’s insistence on delivering a budget on a calendar year timeline rather than a fiscal year – city council should never blindly allocate where the surplus should go as it did this year in voting to throw it all at capital expenditures. As John Lorinc writes in an article today, spending extra money to pay down capital costs or setting it aside as some sort of rainy day fund is fiscally responsible. The question is, how much, what percentage of any extra cash that appears should be used to pay down debt.
In January, councillors voted to use what they thought was a $154 million surplus this year on capital costs. Throwing the extra $138 million in that pot now comes at the expense of the operating budget. We are cutting services and programs (not just phantom gravy) for the sake of paying down debt without any discussion as to the merits of such a move. Or as Matt Elliot suggested at Ford For Toronto last December, that’s “…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.”
Listening to Budget Chief Del Grande’s interview with Matt Galloway on Metro Morning today, we’re being offered a glimpse of how the administration plans on going forward from here. Today’s budget surplus announcement will deprive them of the spending’s out of control argument. Having been hoodwinked this year, most reasonable councillors will view that approach skeptically.
So the mayor and his allies will trot out the spectre of looming capital costs. Some of that fear is entirely justified but without serious talk of new and increased revenue sources like road tolls that Mayor Ford has dismissed out of hand, it will come at the expense of further cuts on the operational side. More reductions to services and programs, further squeezing of departments; an all out attempt to shrink the size of government based solely on ideology rather than sound economic principles.
Bringing down the city’s capital debt will be this year’s battle cry. It will be a debate worth having but it must move beyond simply a debt is bad dynamic. That’s just another ploy used by those conducting their war on government, and who are willing to sacrifice the quality of life in this city to further reduce the roll of the public sector in keeping Toronto vibrant, competitive and equitable.
— prudently submitted by Cityslikr