Our Ongoing Taxing Problem

January 8, 2016

Let’s start with the caveats.caveat

An over-reliance on property taxes as the main source of revenue is not ideal especially for a city the size and scope of Toronto where the services it provides to residents and businesses go beyond the traditional municipal mandate of picking up garbage and keeping the streets safe and clean. This year, once again, nearly 40% of the city’s revenue for its operating budget is coming from property taxes. Read David Hains’ Torontoist property tax explainer from a couple years ago to see just how unwieldy and politically problematic (if reliable) property taxes are.

Secondly, there is no question that the two senior levels of government at Queen’s Park and in Ottawa need to seriously reach deeper into their pockets and start helping out the city more on issues and policies that work at regional and national levels. handitoverHousing newcomers who disproportionately and unsurprisingly begin their new lives in the bigger cities where more opportunities present themselves. Or, properly funding a transit system that carries a good chunk of non-residents to and from their destinations in the city. I mean, imagine if the provincial Liberal government had made good on its promise to re-establish funding half the TTC’s annual operating budget back in 2003, the hundreds of millions of dollars (billions even?) that could’ve gone into, say, the state of good repair backlog?

That said, we need to stop thinking of ourselves as over-taxed here in Toronto. Any way you cut it, our property tax rates in this city in no way should be considered exorbitant, not even close. Not in terms of rates, direct comparisons with other GTA municipalities, as a percentage of household incomes, with the inclusion of the Land Transfer Tax and waste collection costs (pages 104-107). taxburdenEven considering the perhaps more tangible concept of property taxes per capita (which Joe Drew and Rowan Caister did back in 2013) which puts Toronto above the GTA average doesn’t show anything resembling the significant spike some of are anti-tax types would like to portray.

Toronto simply is not groaning under the weight of onerous property taxes. There isn’t any sort of argument to be made for annual property tax rate increases below the rate of inflation. None. It’s simply political gold, pandering, in other words.

Mayor John Tory knows this. That’s why he’s tossed up his .5% City Building Levy proposal. Coming from the property tax base, like the Scarborough subway levy, it’s just a differently named property tax rate increase.shellgame1

An argument could be made about relieving the pressure from the property tax base as such a vital revenue base. City Manager Peter Wallace has been deftly doing just that in his 2016 budget presentations by pointing out the importance of the Land Transfer Tax in balancing the budget to date. Maybe city council needs to look at diversifying where its revenue comes from. It has the power to do so (unlike other municipalities in the province). It just lacks the will.

Sheila Block at the Canadian Centre for Policy Alternatives pitched a couple revenue ideas the other day. Reinstating the Vehicle Registration Tax plus implementing surcharges on private, non-residential parking spots – think the Eaton’s Centre or Yorkdale Mall — throughout the city would bring in an estimated combined $240 million a year. If my math is correct, that’s equal to just over a 9% property tax rate increase.

But Sheila Block and others say the same thing every year, offer up ideas and suggestions on how to help fund the stuff the city needs and expects. notlisteningAnd every year, at least for the past 5 years, a majority of our city councillors shrug and scream TAXES! before insisting there’s just more efficiencies to find, more belt tightening to be done, and we’ll be fine.

Just this morning it was reported that somewhere but not the mayor where, a serious discussion is being had about selling off some of Toronto Hydro for cash to help pay for some of our capital expenditures. Burning the furniture to pay for a roof repair. What alternative do we have? We already pay too much in taxes. That well’s dry.

It isn’t regardless of how many people say it and how many times it’s said. It’s just politically expedient to keep that idea alive. drowninginknowledgeCan you imagine going out on the campaign trail, knocking on doors, looking for support and telling people they don’t pay enough to the city in taxes and that they’re just cheap, free-loading bastards to think they do?

Appealing to our Toronto Sun-fueled sense of grievance and outrage is much easier. Turns out, however, it doesn’t pay the bills. To do that, we have to change how we talk about revenue, spending and exactly why that subway car is too jammed packed to get on. Again. That’s a conversation that begins with, As a matter of fact, no, the taxes we pay in Toronto aren’t extreme or overly burdensome.

repetitively submitted by Cityslikr

Half Measures

December 3, 2015

Earlier this week, I wrote a little something something about the “incrementalism” of Mayor Tory, as mostly supporters of his might call it. babysteps“Small, tangible actions that add up over time to real progress,” according to Siri Agrell, director of strategic initiatives in the mayor’s office.

Yesterday, in his State of the City speech at the Economic Club of Canada, Mayor Tory unleashed some of that incrementalling with a surprise announcement of a .5% Capital Building Fund levy to be added to our municipal tax bills beginning in 2017. Additional money that will be dedicated to alleviating some of our much needed capital infrastructure in transit and housing. Capital investment, currently unfunded to the tune of $20 billion or so, portrayed as a menacing iceberg in City Manager Peter Wallace’s powerful presentation to the Executive Committee on Tuesday.


Could it be, might it be this mayor finally gets it? The news from the new city manager that the city is, in fact, revenue starved got through his low-tax mantra haze? capitalicebergFrequent critics of the mayor, Metro’s Matt Elliott and the Toronto Star’s Edward Keenan, folks I rarely have policy issue beefs with, were more than cautiously optimistic about Mayor Tory’s seeming about-face. A new era of forward-thinking might just have been ushered in at City Hall.

I don’t know, though. Call me skeptical.

Incrementalism or a half measure?

In presenting staff’s 2016 budget, the city manager forcefully opened the door to a much needed, larger discussion about how Toronto funds the kind of city it wants. Let’s talk first about the things we want to do, want to build and then proceed to the way we plan on paying for it. For too long, it’s been done the other way around. Here’s what we’re going to spend and here’s what we’re going to spend it on. (Steve Munro does a much more thorough job explaining the process than I could.) emptypocketsMoney for our civic aspirations has remained in short supply.

To my mind, rather than seizing the opportunity presented to him to lead that vital conversation, Mayor Tory’s sudden jerk in the right direction, nipped it in the bud. See? I listen. I respond. I am doing something.

But just how much exactly is he doing by floating this .5% capital building fund levy? Concluding a lengthy Twitter essay (yes, such a thing does exist), Councillor Gord Perks suggested that at its height in 2022, after a 5 year roll out, the levy will bring in about $65 million a year. “The $65 miillion tax increase proposed by @JohnTory will only cover 1/20th or 5% of our unfunded capital.”

Is that somehow supposed to show the other levels of government that the city has finally put on its adult breeches and is prepared to pony up and pay its way? Here’s a nickel on the dollar. We’re good?

Underwhelming, I’d call it. Mostly for show. It’s hard to imagine it really addressing the city manager’s call for a serious discussion.

While applauding the mayor for proposing the levy, Sheila Bock of the Canadian Centre for Policy Alternatives urged council to think bigger, revisit the revenue toolbox it has at its disposal. comingupshort“These untapped powers provide the city with a menu of options that could raise more than $400 million annually,” she wrote. Remember that Vehicle Registration Tax that got repealed a few years back? Generated about roughly the same annual amount as the mayor’s levy will in 2022.

Too rich for Mayor Tory’s taste, it seems. Little steps instead. Walk before running. “Small, tangible actions,” like his director of strategic initiatives might call them.

Or, as some of us less persuaded might see it, blunting any chance at forward progress or real change. The fact that the mayor vigorously denied the levy was actually a property tax increase in order to keep his campaign pledge of maintaining property taxes at or below the rate of inflation suggests that he’s not really prepared to take on the hobgoblin of misguided, small-minded Fordian penny-pinching ways at city council. babyfalldownHis initial attempt at implying his levy was simply replacing the Scarborough subway tax that was set to end in 2017 (spoiler alert: It isn’t) also doesn’t augur well for the strength of his convictions on revenue generation.

So yeah, I continue to see the glass half empty in terms of Mayor Tory’s motives with this move, half empty like the gesture it is, a mere token. Should he be applauded for giving the impression of being almost, kinda decisive? I don’t know. It’s been pretty much his approach to governance since day 1. Nothing about this strikes me as new or encouraging. A small step when what’s required is a big, bold leap.

unconvincedly submitted by Cityslikr

Resist. Reclaim. Recreate.

November 18, 2011

Resist. Reclaim. Recreate.

Resist austerity. Reclaim the economy. Recreate democracy.

A slogan making the rounds through the Occupy movement south of the border. And one, arguably and unfortunately, that has not made its presence felt here in Toronto. That is for another post but as this city lurches toward the 2012 budget debates it is something to keep in mind.

Resist austerity.

We are being told, hectored actually, in Chicken Little toned language that Toronto is facing a dire, apocalyptic fiscal situation. A mess inherited from years of profligate, wasteful spending. Austerity is not desirable. It’s just necessary. Our hands are tied. We have no choice, folks.

Wrong. Wrong, wrong, wrong.

Fact: the coming year’s “opening pressure” or “budgetary shortfall” of $774 million dollars is just under $100 million more than the average opening pressure of $677 million over the course of the last 5 years. In fact, according to the city’s own reckoning way back in February (pg. 64), the opening pressure could well be some $244 million lower. $530 million which would be significantly smaller than any budgetary shortfall we’ve faced in the last 5 years, nearly $144 million less.

Yet the mayor and his budget chief continue to tout the $774 million figure. Bigger is better. Bigger is scarier. Bigger means more drastic action must be taken.

Resist austerity.

Whatever the number is, whatever the opening pressure or budgetary shortfall turns out to be, what it isn’t is a deficit.

Fact: this number just did not spring up from miscalculation and misspending. It is an estimate, an overly cautious estimate at that, based only on an educated guess at the upcoming year’s expenditures versus the current year’s revenues. How cautious is this overall estimate? It uses expected spending increases while ignoring assumed bumps in revenues. Our opening budget pressure emphasizes cost increases without taking into consideration any boost in money coming into the city coffers. So the budgetary shortfall always skews toward the absolute worst case scenario.

Why? Well, the one thing that municipal governments cannot do, what the other levels of government can, is to run an annual operating budget deficit. So it would be lunacy to make rosy predictions about your financial picture only to find yourself facing an actual short fall come year’s end. A city would be defying provincial legislation if it did. Better to begin with the grimmest of budget scenarios, pencil in 3 massive winter blizzards into the snow clearing budget and when they don’t happen, Bob’s yer uncle. “Found” money.

Ignore the zealot, wailing and with gnashing of teeth, telling tales of unmanageable numbers. The amount is artificially large and under constant downward revision. For those with the best of intentions, it is for the purposes of balancing our books. It is the charlatans looking to exploit what is merely a book keeping exercise so that they can carry out the plans they had all along. An out and out attack on the government they were elected to serve and gut the services it is their job to provide.

Resist austerity.

Fact: anyone telling you that there is no option, that we have no choice but to institute a regimen of severe cutbacks and pleasantly euphemistic ‘belt tightening’ is engaging in straight up scaremongering as a cover for their ulterior motives. That, or they simply don’t understand the budget process. Either explanation should be fundamentally unsettling to the citizens of Toronto. The budgetary ship of state is being helmed by those purposefully looking to sail it right into the rocks or they are simply unfit to be in charge of something as big and complex as this city.

How else can to explain the decision they made last year to deprive the city of a necessary revenue stream? Two, in fact, when they jettisoned the vehicle registration tax and froze property taxes. Both to the tune of some $132 million. That amount alone would’ve reduced the early opening pressure of $774 million down to $646 million, some $31 million less than the average shortfall since 2007.

Rather than working to solve the so-called fiscal crisis, this administration has actively managed to contribute to it. Almost as if they’ve intentionally sought to tie their own hands, limit the options, in order to enact the slashing and burning that’s been their goal from the very start. Sorry, folks. We have no choice. This is the hand that’s been dealt us. My heart bleeds for all those affected but, you know, at the end of the day…

Resist the lure of the inevitable. Our hands aren’t tied. There are plenty of options. Nothing is set in stone.

Or as Sheila Block at the Wellesley Institute calmly inform us in their Countdown to Zero: Balancing Toronto’s Budget:

Toronto city council will be making decisions over the next few weeks that will have an impact on our city’s future. These decisions will have an impact on our economic future, on the kind of city we live in and on the health of all Toronto residents. As this report makes clear, the City of Toronto is not in a severe financial crisis and without options, as the rhetoric coming from the mayor’s office would have us believe. Rather, city council has real choices before it. It can make choices that will support a city building budget: one that builds a more equitable, more prosperous and healthier city for us all. Or, it can make choices that will diminish the city and those who live in it.

Resist austerity.

irresistibly submitted by Cityslikr