Toronto appears headed for a $90-million surplus at the end of the year, but some at City Hall believe the Ford administration isn’t painting an accurate picture of the city’s finances.
A report going before the budget committee Tuesday found that in the first quarter of 2012 Toronto has racked up a $70-million surplus, and predicts that at year-end Toronto’s coffers will be overflowing by $90 million.
The report from the deputy city manager and chief financial officer says the bulk of the projected savings will come from higher-than-budgeted revenue from the land transfer tax, and negotiated settlements with the city’s main unions, which froze 29,000 employees’ wages this year.
But at least one councillor is expressing skepticism of the report in light of last year’s budget process, which began with the mayor’s team warning of $774-million shortfall and ended with the city posting a $292-million surplus.
Councillor Joe Mihevc believes city staff are again underestimating the 2012 surplus in order to justify the mayor’s cost-cutting agenda on the grounds that the city has little money to spare.
“It will be way more than $90 million,” Mihevc told reporters Monday. “I’m betting dollars to donuts, it will be much more than $90 million. Maybe double or triple more than $90 million. Or quadruple.”
Toronto has averaged an annual surplus of $338 million over the past three years, and Mihevc believes the projection for 2012 is being kept artificially low to force city departments to put a lid on “any ideas that we might actually do some city building, that we might actually want to invest in some programs like housing, like TTC, where we’ve been cutting, cutting, cutting.”
Councillor Gord Perks, also a frequent critic of the mayor, disagrees. He says that the $90 million figure is likely accurate.
According to Perks, in recent years financial staff has gotten better at predicting the land transfer tax, which was instituted in 2008 and has habitually outperformed estimates thanks to Toronto’s booming development market, leading to large surpluses.
“We have gradually increased how much we’ve projected for the land transfer as we get more experience with it,” Perks says, adding that overestimating revenues from the housing market would risk “chasing the bubble.”
Now that staff are better at estimating how much the tax will bring in, Perks says the days of big surpluses are over.
“The kind of surplus we’ve seen in previous years won’t happen again,” he said.
Meanwhile, councillors who support the mayor’s government-shrinking agenda are hailing the report as proof Ford’s penny-pinching ideology is taking hold at City Hall.
“The mayor deserves credit for putting forward a message loud and clear that we have to squeeze every last bit of usefulness out of every dollar we receive at the city, and see to it that it’s well spent and delivers value to our residents,” says Councillor John Parker, who sits on the budget committee. “I think that message has gotten through to everyone.”
But Perks says credit for Toronto’s financial health should go to David Miller for implementing the land transfer tax, which Ford has vowed to kill. The report projects the tax will bring in $330 million in 2012, contributing $41.7 million to the $90-million surplus.
“This is the legacy of the land transfer tax being brought in, and the good management of the previous administration,” Perks argues. “Anybody claiming that Rob Ford has had anything to do with [those] successes is a liar.”
