Toronto city budget looking lovely on Valentines Day

Post by Daniel Fontaine in

1 comment

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With Vancouver facing an unprecedented 10.29% tax increase, we sent our crack CityCaucus.com research team on a five hour economy flight to Toronto City Hall to investigate how their budget process was coming along. The cover of the 236 page report they produced for our executive team was entitled: Toronto Residents Facing Massive 4% Tax Increase. Hogtown thinks 4% is massive? They've got to be kidding. Have they flown over to this side of the Rockies lately? 

The report included a copy of Mayor David Miller's speech whereby he outlines what Torontonians can expect for their massive 4% tax increase. It's a startling list:

  • Freeze on transit fares for 2009
  • Freeze on garbage fees
  • Freeze on development charge increases for residential construction
  • Increasing the income and assessment thresholds for the property tax deferral and property taxcancellation programs. The combined impact of these adjustments will mean that an additional 22,000 households will be eligible for tax help when they need it, ensuring that seniors and low-income families can stay in their homes, while the city can continue to provide the services we need.
  • A new fast track of development applications for commercial and industrial buildings
  • Significant increases to their transit service
  • Increased funding for police
  • Reduced tax rates for commercial, industrial and small business properties
  • A public-private partnership is providing 3,500 new benches, bus shelters and garbage bins

Some of the Mayor's critics charge that he has hidden a bunch of costs in the fine print of the budget, and the 4% figure is simply a ficticious number. Regardless, it is hard to argue that Toronto's budget appears to be much more palatable than the one about to be approved in Vancouver.

The secret to Miller's success might very well be the fact he directed city officials to find over $100 million in efficiencies to help balance the budget.

We're somewhat doubtful a similar cost cutting exercise now under way in Vancouver will yield similar results. A memo City Manager Penny Ballem issued late on Friday wants taxpayers to believe that with the exception of permanent unionized employees, almost every job at City Hall is on the chopping block. It's worth noting that word of a pending 'cost cutting' memo was strategically leaked (along with the appropriate dose of spin) to select media folks earlier in the week. So did Ballem's memo live up to expecations?

She states there will be a few contract employees impacted, however, Ballem makes it very clear that pay raises equalling 17.5% for the unionized workforce are not up for re-negotiation. These are the very pay raises that form the largest portion of the anticipated 10.29% property tax increase. As there is a collective agreement in place, the only realistic way those wage increases could ever be part of a cost cutting exercise is if union brass were willing to play ball. That's simply not going to happen, so Ballem's budget options are severely limited.

Ballem also makes no mention of moving the City toward zero-based budgeting, something the business community has been demanding for years. If there was ever an opportunity to move in this direction, the time would be now. Don't count on it as this process would likely reveal major programs that could be eliminated resulting in serious layoffs within the unionized workforce.

So what does the City Manager do? Sources within City Hall confirm her management team are looking at ways to minimize layoffs through a combination of reduced services and increased user fees such as hourly parking rates. Expect to throw in a couple more toonies in the metre for the privilege of parking your SUV downtown. Rest assured, they'll claim this is an effort to reduce carbon emissions, not simply a cash grab to balance the budget.

At the end of the day, it's doubtful the City Manager will recommend Council cut anything more than a few token contract positions. She simply can't do anything else considering who's in government. One need only look back a few years to understand why.

During the NPA's recent term, they introduced 3 separate budgets. Each of them had their own unique challenges. In 2006, I sat in the Chamber when Vision spent countless hours vehemently opposing every single proposed cut - in particular, those related to staffing.

In fact, I recall one incident at three in the morning where one councillor was foaming at the mouth regarding the loss of three jobs in the IT department. That was until the City Manager told him there were actually no people working in those jobs at the time as the positions were all vacant. Oops.

Fast forward to 2009, and it's hard to believe that 'Mayor' Meggs and his council colleagues now want to become known as a bunch of right-wing, fiscal conservative zealots hell-bent on balancing their budget. With even conservative governments no longer focused on balancing the books, it would be hard a message to sell in any event.

Rather, expect Vision to come out and say they did everything possible to protect unionized jobs during a difficult economic cycle. Add in a nice dollop or two of anti-NPA bashing and this budget will be positioned as a more caring and balanced approach than previous ones. In other words, they want to come out of this process looking and sounding like traditional Liberals.

Indeed, these are tough times for big cities across Canada. But if Toronto is any example, there is a way to keep new taxes at a minimum while protecting essential programs and services. Vancouver could learn a lesson or two.

Wishing a Happy Valentines Day to all our readers!

1 Comment

Yes, the 4% IS a hefty increase for those of us on a fixed income - particularly when the other realities are factored in. ALL utility costs have increased. The savings we may have accrued over years of working have often decreased significantly at a time when costs are going up. That means that we are facing the possibility of not being able to afford to pay bills to just live in our homes. For the decision makers who have recently seen a pay increase the actual amount seems small - IT DOES NOT SEEM THAT WAY FOR MANY OF THE PEOPLE YOU REPRESENT!

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