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Beware Ford’s low-ball

With city council meeting on Monday for what should be a doosie of a debate on Ford’s service cuts, one thing to watch for is whether anybody on the mayor’s team trots out the number $774 million. That’s the daunting amount of budget pressure they’ve been telling us for months the city is facing.

That figure had already been thoroughly debunked by the more mathematically inclined members of the media when it took a serious dent to its credibility early Tuesday morning when city manager Joe Pennachetti, perhaps growing groggy in the fifteenth hour of an all-night meeting of Ford’s executive committee, conceded under questioning that the real number might be closer $500 to $600 million.

There was momentary confusion in the Ford team’s ranks, and after the meeting some hardliners like Giorgio Mammoliti immediately adjusted their rhetoric to reflect Pennachetti’s new math, while others like budget chief Mike Del Grande suggested the actual number doesn’t matter so much as the fact that the city is facing a structural deficit of a large, unspecified amount.

Now that they’ve had time to regroup it’s unclear if Ford and company intend to admit the jig is up on the $774-million bogeyman, and some councillors over the course of Monday’s meeting may be bold enough to wag that number in front of our faces yet again.

If so, it’s worth remembering there are some much rosier statistics coming down the pipe. The truth is that the city finance department has substantially low-balled 2011’s budget projections, and when the dust settles in December we’re going to have more money in the municipal coffers than city staff has budgeted. About $230 million more, in fact.

Where will that money come from? The short answer is that it will be appear by correcting some creative bookkeeping on the part of city staff.

Just take a look at the projections for how much revenue the city’s supposed to haul in this year through non-program revenue, and you’ll see how much staff has underestimated the health of our finances.

According to a city budget report, staff has projected that the city will make $44 million in parking revenues this year, even though over the previous two years the number was over $60 million. Revenue from parking enforcement is pegged $77 million, compared to $86.6 million in 2010 and $93 million in 2009. The land transfer tax (which Ford has promised to get rid of) is predicted to come in at $226 million, $52 million less than last year, while supplementary taxes, the money collected from updating tax rolls to reflect new construction projects, is projected at only $35 million, half of 2010’s total and nearly $19 million less than the total from 2008.

Add up all the figures from the non-program revenue stream and compare them to last year’s results, and we’re looking at an underestimation totaling $233.8 million.

So we have a historically terrible year across the board, we’ll have at least $230 million more than we’ve budgeted for, and that’s just from the proceeds of non-program revenue. There are other less lucrative streams of revenue that will also contribute to the surplus. As other commentators have pointed out, together those revenues will go a long way to bringing the deficit under control.

It should be noted this isn’t bad bookkeeping on behalf of the finance department. The city habitually underestimates its revenue every year, just to be on the safe side. It’s sensible planning.

Councillors know this of course, and the longer Ford’s allies persist in sticking to the unrealistic $774 million number and posing a false choice between a 35 per cent property tax hike or painful cuts, the more they resemble fear-mongering ideologues out to gut city services with no sound economic motive.

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