Toronto, I’m sorry to say, lacks budget transparency. As we approach the 2013 budget free-for-all, get ready for the great confusion.
City number crunchers are operating on the assumption that there will be a $200 million shortfall. But is this really the case?
Staff do their best to present an accurate budget, but they’re handicapped by instructions to ensure there’s no deficit, and tend to use inaccurate forecasting models.
Everybody remembers the $700 million alleged shortfall politicians used last year as crude way to create a crisis justifying large cuts to services. In the end, there were mild cuts and a 1.75 per cent tax increase. Without an arm’s-length watchdog like the Parliamentary Budget Office to provide independent analysis, it’s hard to take seriously the yearly projections of gloom as the process begins.
Budget time is difficult every time around. There will always be way more demand for services than there is money to pay for them, but we need a more rational discussion.
This year Toronto ran a $188 million surplus in the first six months, but staff are still conservatively expecting only a $115 million surplus by the end of the year. The city manager issued an order at the mayor’s request to freeze all departmental budgets – which, with rising costs, effectively means cuts.
We have too many needs to waste money on programs we no longer require or on inefficient practices. The problem is, no neutral, objective and comprehensive review is being carried out. Instead, crude freezes or reductions like last year’s 10 per cent across-the-board cut are used to lower expenditures. This is not good public policy.
For one thing, council has a series of service standards that were democratically voted upon, and there are legislative requirements for minimal service in some areas. In many cases these are not being met.
There’s a pervasive myth that the key to solving budget problems is greater efficiency. But this argument has been used for over 20 years, and while there may be some slack left, almost all has been eliminated after years of detailed reviews by bureaucrats currying favour with politicians, outside consultants and politicians of both right and left.
Another untruth is that we’re greatly overtaxed. Most municipalities in the GTA raise taxes between 4 and 8 per cent a year to meet inflationary realities, implement new services and accommodate population increases. Toronto has the lowest taxes in the region, and with a growing population and aging infrastructure and demographics, a 3 or 4 per cent jump would be reasonable. This would represent a $60 to $90 increase per household, except for low-income people and seniors, who can take advantage of tax relief programs. Many other communities pay much higher per-house costs owing to higher costs for services.
Nobody likes to pay taxes, but shouldn’t we expect that inflation will increase the cost of services? General inflation numbers like the Consumer Price Index only track a basket of goods and don’t accurately represent the full inflationary cost of living, so saying we have an above-CPI tax increase is not useful. Inflation for services runs at around 3 or 4 per cent – about double the CPI. In fact, Statistics Canada is currently studying a better measure.
As well, inflation doesn’t account for the fact that costs rise because of population increases of 0.75 to 1 per cent each year. No, growth doesn’t pay for itself.
One year of cuts like those in the 2012 budget has meant projects were deferred and standards lowered to a small degree. “Gapping” (intentionally leaving positions vacant) reduced the staff head count without permanently eliminating positions or service, and today over 1,800 such positions remain unfilled.
In the case of emergency services, we have 200 fewer police officers than the number council endorsed, we’re short 132 firefighters, and there are about 200 fewer paramedics than there should be. On a regular day, most of these services will operate at an acceptable level, but there will come a time when they are overburdened.
In other areas, reduced staffing means less cleaning is done, calls aren’t responded to in good time or repairs are left undone, ultimately leading to more expensive future repairs. Further budget cuts will make this already problematic situation worse, and soon the cracks will become apparent not just to a few of us, but to many more.
Our mayor’s record on budgets isn’t that impressive. In his first year he balanced the budget with a large David Miller-era surplus, and in his second with across-the-board cuts. With council recently emboldened, this blunt instrument will be harder to use.
The 2013 budget debate is just getting started, but let’s hope that a more budget-savvy population and a council willing to stand up to the mayor will put an end to the era of large cuts and tax freezes. Then what we’ll need is a unifying vision for next steps.
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