Strange to think city officials were brimming with confidence less than a month ago. They believed that the generosity of a Toronto-friendly provincial government would enable them to balance their $7.1-billion operating budget without hiking residential property taxes more than 3 per cent or taking a knife to important public services.
It would seem the folks at City Hall were dreaming in Technicolor. Because here they are now, whittling away at social and emergency service programs, raiding what's left of their rainy-day reserve funds (most of them in critical social housing accounts) and preparing to hand over to Queen's Park a prime piece of municipally owned real estate to make up a $47-million shortfall in expected provincial funding.
Not to mention having to respond to grumbling that they should reform their own system of government down so Council becomes a leaner business machine.
"Something went wrong at the province," says Mayor David Miller, speaking of the budget debacle. Until the end of last week he'd been among the crowd of local politicians and bureaucrats counting on Premier Dalton McGuinty not only to pay the city the $72.3 million it's owed for cost-shared programs, but to defer again a $20-million amalgamation loan payment.
There was also considerable hope that the Grits would remove the cap on city commercial property tax increases and equalize the business education tax across the GTA to relieve pressure on Hogtown merchants.
But the city got less than half of the expected $92.3 million. Something went wrong, all right. But what?
"I can't speculate as to why," says Miller, "but [the Liberals] totally changed their tactics from the unofficial assurances that had been happening in the three weeks leading up to the announcement."
Budget chief David Soknacki was considerably more forceful in his assessment of the situation. "Disingenuous at best and misleading at worst," is how he described the provincial approach to the financial negotiations. "It was a set-up."
According to Soknacki, who along with treasurer Joe Pennachetti and several key finance department staff did most of the city's supposed bargaining with Queen's Park, the province was well aware of Toronto's financial expectations right from the beginning and did nothing to discourage them.
"We told them back in early December: 'Here's what our assumptions are. Are you OK with those assumptions?'" the councillor for Ward 43 (Scarborough East) maintains. "They said there would be difficulty for them on the cost-sharing portfolio, but they admitted that the city position [that provincial programs like social and emergency services should not be funded by Toronto's property taxes] was logically and morally correct."
Soknacki says the city's understanding was that, although the province couldn't give Toronto its $72.3 million in cost-sharing payments without being expected to pay as much again to other Ontario municipalities, the indications were at least some of the money would be paid directly to the city, and the remainder would come from other provincial sources.
However, about two weeks ago, Queen's Park stopped communicating with the city. "We were anxious because we had not heard from them," Soknacki says. "We had no proposals from them, nor were they returning our calls."
According to well-placed Liberal sources, the shunning of the city began when government MPPs from outside the capital city started voicing loud objections to what they called special treatment for Toronto. "A caucus revolt," one local MPP called it. "The rural guys were creating a lot of pressure. Quite honestly, I think that's what turned the tide against the city."
When Soknacki finally got a call at 11 am on the day of Minister of Municipal Affairs and Housing John Gerretsen's funding announcement, the budget chief says he was told to present himself at Queen's Park at 1:30 pm so he could get the details of the package before it was released to the media 30 minutes later.
"It's no partnership when you're told what's going on minutes before the news conference starts," Soknacki fumes. "For us to now carry on discussions with the province on the new City Of Toronto Act . I wonder what the rules are."
According to Brad Duguid, the Liberal MPP for Scarborough Centre and Gerretsen's parliamentary secretary, changes to a municipal governance structure that seems to put Toronto in budget trouble year after year are "definitely something that should be on the table."
One wonders if the latest disagreement over provincial funding formulas may have been sparked just to make governance a bigger issue than it might otherwise have been. While Duguid completely dismisses Soknacki's complaints about the city's negotiations with Queen's Park ("Our position was clear from the beginning," he insists), the former Toronto councillor isn't above taking a shot at his former colleagues.
"It's tough for a council to make a really tough fiscal decision with 45 members," he says. "I'm not saying there are too many, but there's not a lot of incentive for them to make tough decisions." Like paying for provincial programs out of the provincial treasury, perhaps?
Other sources in municipal affairs insist there are no plans to cut the size of council as part of new legislation supposedly intended to give the city more power to raise money without constantly running to the province for permission. But they maintain there's considerable pressure from "third parties" like the Toronto Board of Trade to bring in some form of strong mayor system with a powerful executive committee to have more control over financial matters.
"Make what you want to make of that, but it's definitely out there," says one well-placed government insider. "A lot of third-party folks feel that if you're going to go to a much broader set of powers for the city, then it needs to have some increased discipline on the big-money decisions. The budget process we're seeing right now has a whipsaw effect - to get support, everybody has to get their local initiative or pet project into the mix."
And here we thought that's what local politics was all about.