Be Coloured Skeptical

Before we proceed too far down the 2013 budget deliberation path, I really think we need to set up some sort of Budget Comprehension School. Municipal Budgeting For Dummies 101. For anyone seeking to opine on matters related to the budget process they will have to learn a few basics and pass non-multiple choice examination. City councillors (including our budget chief) and staff (including our city manager), journalists, hoity-toity dilettantes who shall remain nameless.

Barely out of the gate this year, and we already seem to be simply throwing numbers, big numbers around. Yesterday the CBC reported that the opening “shortfall” for next year’s budget was $200 million. “It’s nearly $500 million less than the ‘opening pressure’ identified by the city manager at the start of the budget process in 2011 when city departments were asked to cut their budgets by 10 per cent.” Actually, last year’s “opening pressure” was reported to be some $774 million. So that would make the difference closer to nearly $600 million not 500. But, who’s counting?

Apparently, different people with very different types of calculators.

Last week, when Budget Chief Del Grande went to the Toronto Police Services Board to tell them it’d be all belt tightening for realz this time, and not just some pretend spending reduction, we read that, in fact, the opening pressure was going to be some $465 million. Still, substantially less than last year but not $500 or $600 million less. What gives?

How can we possibly have a reasonable discussion about this city’s financial situation, conduct an honest debate about budgeting when we can’t even agree on a starting point? I get that, especially this early on in the proceedings, it’s all about estimates. We’re still, what, 5 months away from the 2013 budget vote? Never mind about 8 months from the end of the 2012 fiscal year when the numbers really solidify. But can’t we at least settle on something resembling a concrete estimate?

The problem with this “opening pressure”, aside from actually understanding what it is – the total costs the city estimates it will have to pay out in the upcoming year? – comes from it being used as a political football. If councillors and senior city staff want to scare Torontonians into favouring cuts to services and programs or have sign off on a tax increase, the “opening pressure” is always big and seemingly on the verge of being unmanageable without a heroic effort to tame it. On the other hand, if their intent is to display their fiscal acumen, the given number is low. See how we’re managing your money, Toronto.

The number we use as the opening pressure should be fairly straightforward, within reasonable limits of variation since it’s based on educated guess work. I would argue that a $265 million difference within a 5 day span does not constitute a ‘reasonable limit of variation’. Somebody’s playing with numbers. Somebody’s not doing their homework.

And, of course, the opening pressure is only half the equation.

It’s all about projected costs. The full picture doesn’t come into focus until revenues are factored in. Crunching numbers solely on costs would be like tallying your mortgage, car, food, utilities, school tuition and all other personal expenses, panicking about the huge number staring up at you from the bottom of the column and deciding the sell your house to pay for all of it. But.. but.. what about your income? Surely, that’ll help offset at least some of those costs, yes?

An opening pressure is just that, a starting point. It should not be a number wielded above your head like an axe. Whether it’s $200, $465 or $774 million, this is not the amount of money we need to find in order to balance our books. And we always have to balance our books. It’s provincially mandated. So when you read or hear that the opening pressure is x millions of dollars and the implication that follows is that we have to make x millions of dollars in cuts (or raise taxes y percent to generate x millions of dollars) in order to reach a zero balance, step back, cross your arms on your chest and ask, And what about the revenues?

But forgive me. It seems I’m getting ahead of myself here. That’s lesson two. First, there’s still the matter of settling on our opening pressure. Without that, it’s all just hepped-up, partisan politicking.

numerically submitted by Cityslikr

3 thoughts on “Be Coloured Skeptical

    • Okay, friends, here it is:: Get on the website and look up the Final Budget Council Session Presentation from staff. Every year it ends with the “Future Year Outlook”. At the top of the Outlook is the Opening pressure less any revenues that can only be estimated. Then all such incoming revenues are estimated (Land Tsf Tax, TTC Farebox, Assessment Growth,user fees) and at the bottom of the pages is the “Remaining Pressure” for the next year. In 2013, for instance, it’s $180 million. Not a sexy number. Doesn’t raise your blood pressure. Major daily newspapers never use it because it indicates that the real financial picture has been improving steadily ever since 2005, and substantially since the advent of Land Transfer Tax revenues in 2007. That is not news. Every story needs a crisis or a conflict.

  1. I suspect that Ford/Del Grande’s proposed budget will once again be greater than David Miller’s 2010 budget that supposedly had so much bureaucratic gravy?!

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