Rob Ford's budget chief is going to have a tough time getting rid of the land transfer tax, with members of his own committee dismissing his latest plan to slowly eliminate the David Miller-era levy on real estate deals.
Speaking to reporters before a meeting of the budget committee Tuesday, Councillor Mike Del Grande said he'd like to phase out the tax by cutting it by five per cent every year, acknowledging that at that rate it would take 20 years to carry out Ford's campaign promise to kill it off.
Later, during the meeting, he argued the city shouldn't be looking for tax revenue when there was still plenty of savings to be found at City Hall. As an example he cited absenteeism rates among employees, which he claimed cost the city millions of dollars annually.
"You don't have to go asking for more revenue if you can control those types of costs," Del Grande said.
But Councillor Peter Milczyn, a Ford ally who sits on the budget committee, thinks it would be unwise to get rid of the tax.
He laughed when told of Del Grande's 20-year timeline.
"I don't think we're in a position to touch the land transfer tax," he said.
The city's chief financial officer is projecting the tax will bring in $330 million in 2012, and said Tuesday that revenue would be the main driver of a year-end surplus expected to be at least $90 million.
The committee heard on Tuesday that number is likely to increase thanks to the recent $1.3-billion sale of Scotia Plaza, which alone could generate as much as $15 million in land transfer tax.
While Milczyn believes that the money coming in from the tax is unprecedented and will diminish once Toronto's housing market cools down, he says that the city should make use of the renenue while it can, and devote the money to infrastructure projects.
"I think people wouldn't mind paying out as much if they knew it was building a subway or fixing the roads," he said.
Councillor John Parker, another committee member, also said in an interview Monday that he doesn't support doing away with the tax, which he says should be allocated to capital projects.
"We have enough of a budget challenge in this city [without] cutting any more sources of revenue than we've already done," he said.
The councillor believes things have changed at City Hall since Ford's first month in office, when in a 39-6 vote council helped him carry out his campaign promise to kill the $60 vehicle registration tax.
"There was a lot of political pressure that led to the elimination of the motor vehicle tax, so a whole lot of people voted to eliminate that who were probably unhappy to see it go," Parker said. "I think now, there's less political pressure to start cutting revenues, and there's a greater recognition that we should focus on costs, but not be too cavalier of letting go of our sources of revenue."
At Tuesday's meeting, chief financial officer Cam Weldon also gave reporters a sneak peak at the 2013 budget numbers, which for the moment look good.
Weldon said that thanks to the land transfer tax and recent spending reductions, the city will have less than $199 million in net opening pressure in 2013, compared to $503 million in 2012, and by the following year could end the practice of relying on draws from reserve funds to balance the books.
"We should be in good shape by 2014, provided there's not a significant economic downturn, [and depending on] the decisions council makes around services and revenues," Weldon said, noting that there is still a large backlog of capital projects that need funding, including repairs to the Gardiner Expressway.
Councillor Gord Perks was quick to argue that Ford doesn't deserve credit for Toronto's positive budget numbers. He said any spending cuts the mayor has pushed through council have been offset in lost revenue.
"The property tax freeze [in 2011] and the cut of the vehicle registration fee wiped out any savings that he generated since becoming mayor," Perks said. "We got here because for seven years Mayor Miller's budget committee found efficiencies and brought in new revenue tools to close the funding gap."