“I’m going to treat this as a technical audience,” Peter Wallace warned at the top of his talk. “I’m gonna treat this as an annual gathering of fellow public policy, public finance nerds.”
He did, and it was. But Wallace, Toronto’s city manager the most senior civil servant in the municipal government still sold himself short with this caution.
In the fifth annual City Manager’s Address to the Institute on Municipal Finance and Governance at U of T’s Munk School on Monday, October 17, Wallace invoked the nightmarish spectre of cancer, among other metaphors, in describing the city’s ongoing budget distress.
While no less fond of euphemism and jargon than you might expect of someone in his role, Wallace’s discussions of Toronto’s finances are also frequently characterized by thinly veiled contempt for the ideological stubbornness of many of his bosses on Council.
And so, as we’ve seen, it can be fun to peel back the surface to uncover the frustration barely concealed underneath.
Here are lightly edited highlights of his talk, followed by even blunter translations:
“The citys influence is fundamentally all about how it both takes money from the public and how it allocates that money: it is that spending authority. And in a very real way, policy intention in the city is not that important its not passion or rhetoric or where we try and lead. Its what we actually do. And what we actually do as a city, the expression of the values, is not rhetoric, its not commentary, its what we actually fund.”
Translation: Politicians can say whatever the hell they want and they do! but unless they back up their commitments with funding, their words mean nothing.
“Austerity has been the primary focus of the City of Toronto in a governance sense over the last number of years. And the government, when you make any kind of appropriate adjustment for inflation and per capita, is actually smaller than it was. So despite the increased demand for public services, government itself is a little bit smaller as a share of GDP. A little bit smaller as a share of family income. In any kind of appropriate measure, governments a little bit smaller. What thats led to is this really big gap between expectations and funding.”
Translation: You can’t keep shrinking government while also trying to do more or even the same. Stop acting surprised when this doesn’t work out.
“While a focus on the bottom line and austerity or expenditure control will be really important, theres no way were going to match our expectations with our spending capacity without some resort to revenue. That is a reality. And that has been, to be quite frank, consistent with what every city manager since amalgamation has said. This kind of theme is completely in the mainstream.”
Translation: Yes, you’ve got to keep finding efficiencies. But you’ve got to raise more revenue, too! Everyone who’s had any clue what they’re talking about has told this to Council. Many times. It’s not some radical hippie idea.
“Im gonna draw an analogy here: smoking. Doctors will bother people about smoking and suggest that maybe smoking isnt a good idea. But a lot of smokers certainly will have the idea that ‘Im still here. I was here last year. Im here this year. Then smoking is okay because it hasnt killed me yet.’
“And the reality is, whether its smoking or whether you live in BC and like to ski during avalanche terrain every winter these things are risky behaviours, and they might well catch up. And I am a public servant. As a public servant, I take risk with great seriousness. I advise that risk should be mitigated, managed, and minimal.
“And right now we are very heavy smokers in the City of Toronto.”
Translation: Trying to run a city by cobbling together an operating budget one year at a time and by the seat of our pants with no long-term strategy or path to sustainability is stupid and dangerous. The economy will eventually falter, our run of luck will end, and we’ll no longer be able to rely on one-time measures or generous land-transfer-tax revenues to close the gap.
“Weve now had six years of austerity focus. Whatever is left in 17 and 18 is something that escaped the four years of Ford, the first year of Tory, and now my second year as city manager. Its getting increasingly hard to rely on savings. And even during the peak era of Ford, when we made savings that were clearly unacceptable to Council because it reversed itself on those at the earliest opportunities we were not able to get savings that actually offset the overall growth in the size of the funding envelope.
“So savings, austerity absolutely a critical tool. But not sufficient. Absolutely not sufficient.”
Translation: I know people believe there are still inefficiencies to be wrung from the government, and they might even be right. But if you think that’s the primary solution to the city’s budget woes, you are wrong. Just dead wrong.
“What matters is the bottom line, which is political acceptance. Im working for a council that is exceptionally reluctant to use one of those funding tools, and that is an increase in residential property tax particularly an increase to a level that might be necessary to close a significant gap in 17 and 18.
“And that is a reality. That is a reality. That is my reality, that is the public policy reality, and it is something that I work within. So recommending the unacceptable is not a great way for a public servant to make a living.
“So I need to work around a Council that has given me some very specific operating instructions, and I will be working within those over a period of time.
“But there is a core reality that for its entire history, the City Council of the amalgamated City of Toronto has placed a very high priority on low property taxes, and thats likely to continue over the next little while.”
Translation: I’ve pretty much given up.
“You might think, ‘The province owes us that money, therefore the province should buy us that new whatever.’ But its not gonna happen. Like, its just not gonna happen. The province is dead-flat broke, forget it, not gonna happen.”
Translation: It doesn’t matter what expenses the province should chip in for as a matter of fairness or justice. They have their own issues and are sure as hell not interested in subsidizing Toronto’s low property taxes.
“We are really truly struggling with the demands of density and particularly the transit associated with that. And were struggling with the demands of poverty, social cohesion, and all of those other things. And we are actually ending up in a situation where we are transmitting risk across generations and across different classes of people. And as a city, we do not have the funding tools available to deal with that.
“Had we actually raised property taxes each and every year at the rate of economic growth, we might actually have that capacity. We didnt. We dont. Its a gap. Were gonna have to address it.”
Translation: As we have yet to develop a machine to go back in time, decisions still have consequences.
“I think a fundamental question associated with a long-term plan is what kind of city do we want? And what do we want? Do we want to actually make ourselves smaller as a city? Do we want to step away from those priorities? Or do we want to invest in those priorities?
“Council has always answered, ‘Yes.’ It wants to invest in those priorities. It just has not yet provided the funding mechanism to do that.
“And the asymmetry in the Council agendas… If you look on a week-by-week basis, there is an enormous amount of material, each piece of which looks to make government do more. And then once or twice a year we have a conversation about making government smaller. Thats a gap we need to close.”
Translation: You know how in Alice In Wonderland, she keeps swallowing things that make her bigger and smaller, bigger and smaller, in accordance with the demands of the plot?
“Part of the reason that the TTC has a problem is that the TTC is managing on a shoestring. And its really hard to look good when youre managing on a shoestring. And Ive had an opportunity to work in the province. I think I can tell you that theres a difference there.”
Translation: Give us the money to do our jobs properly. Please.
“The City has a one-year plan with a one-year outlook. And thats all. There is no forward guidance.
“Council does not make decisions that fit it into its budget constraint. Thats because it has never provided itself with a budget constraint. Its provided itself with an aspirational sense of a plan. But there is no four-year or five-year or three-year string of numbers going out.
“We are driving down a very dark dirt road with only our parking lights on, and we need to have a better conversation about illuminating the way and providing some guidance for Council more sophisticated, mature conversations.”
Translation: Council makes it up as they go along. That is no way to run a city.
jonathang@nowtoronto | @goldsbie