The key feature of the mayor's budget plan: spend more money than you're willing to raise.
Rob Ford has some serious problems with Toronto’s draft 2014 operating budget. When City staff unveiled their recommendations the mayor denounced the property tax increase it includes and stalked out of the room, followed by a press stampede that the Lion King‘s Scar could not have engineered better. Unsurprisingly, the first round of articles about the budget orbited around Ford—focused on his reaction rather than the content of the budget itself—and his claim that a 2.5 per cent residential property tax increase was evidence of a returning gravy train, one that had picked up steam in the week that had elapsed since council had stripped him of most powers.
This, to be clear, is false: Joe Pennachetti, the City’s top civil servant, told reporters that “there was no impact with respect to the mayor’s role” and even if you aren’t inclined to believe him, the suggestion that staff would be able to substantially revise a $9.6 billion budget in six days is preposterous. Toronto’s budgets take months to write, weeks to finalize, and days to format and print.
Compounding this proclamation of ignorance (whether willful or not), Ford maintains that Torontonians can only bear a 1.75 per cent property tax increase, and that it is entirely possible to reach this target without cutting services and while simultaneously reducing revenues. This too is preposterous. The primary conflict here is not between Rob Ford’s 1.75 per cent property tax increase and the 2.5 per cent increase recommended by staff, but between Rob Ford and reality.
Here is why City staff’s numbers add up, and Ford’s do not.
HOW THE BUDGET WORKS
The 2012 budget process was historic for its acrimony. In the summer of 2011 hundreds of citizens pulled all-nighters to give deputations before assembled councillors, defending municipal services that the mayor and his executive committee deemed expendable. To those residents, however, the services slated for cuts—including libraries, homeless shelters, and the student nutrition fund—were essential. In the end, council overruled the mayor and saved many services; the margin was one vote.
The 2012 process highlighted several important features of our operating budget. Because the City faces annual inflation and cost of living increases for employees, and because 90 per cent of its services are provincially mandated, achieving the mayor’s hoped-for 10 per cent cut was effectively impossible. As part of the 2012 budget, council passed a 2.5 per cent residential property tax increase, one which the mayor proposed and supported. That increase reflected, and was necessitated by, an important fact about our budget: every year it comes with an inconvenient but unavoidable funding gap. (Though the City’s costs automatically go up each year because of inflation, property taxes do not—council needs to decide to increase them.)
This year’s proposed 2.5 per cent property tax increase breaks down into three main parts:
First is the maintenance of existing services, which requires a 1.4 per cent property tax increase.
Second is 0.6 per cent, to pay for some enhanced services. For instance, over the past two years the police force has not brought on any new officers, and so this year plans include hiring 200. Also on the list: some new firefighters, more shelter beds, and some other relatively small-ticket items. The lion’s share of the money will go to the police enhancements, which Rob Ford has endorsed.
The third element of the property tax increase is 0.5 per cent which council has already voted on, to help pay for the Scarborough subway. (This, if you’re wondering, is not negotiable: because of the wording of the motion that’s already been passed, council is not allowed to reduce services elsewhere in the City in order to accommodate the subway extension. In other words, even if council did muster some new political interest in cutting services, it couldn’t use the savings to pay for the Scarborough subway.)
HOW ROB FORD THINKS THE BUDGET WORKS
It is unclear how Ford arrived at his 1.75 per cent property tax increase rate (other than “sounds good”) but he first shared his commitment to it on his radio program in April. Since then, however, council endorsed a multi-year, 1.6 per cent property tax hike to fund the Scarborough subway extension—a subway that Ford ardently, desperately supports—beginning with the 0.5 per cent property tax increase in 2014.
While the mayor was quick to take credit for the Scarborough subway extension, he has not embraced the responsibility to pay for it with the same kind of enthusiasm. After the subway vote Ford began claiming that his 1.75 per cent property tax increase would include the new 0.5 per cent subway tax, without noting that he was effectively reducing his own proposal to just a 1.25 per cent increase, much less explaining how he would pull that off.
Ford also wants to curb revenue streams, which puts further pressure on the budget. Most important to him is cutting the land transfer tax, which he wants to reduce by 10 per cent. (Senior financial staff say this would be imprudent.) In addition, he opposes the proposed $5.25 Metropass hike, likening it to a vehicle registration tax on transit users. (It is true that transit riders are overburdened in Toronto: since council has cut the TTC’s subsidy under Ford, increased fares are used to fill the transit budget gap.) The impact of these two decisions would be $43 million.
There is a total $62 million gap between what the mayor says the public is willing to pay and the list of things he wants to do, equivalent to an additional 2.5 per cent residential property tax increase:
Here is the key point: Rob Ford has not specified what services he would cut, or what new sources of revenue he might find, in order to make up for the added pressure his wishlist would put on the budget. Right now he is just proposing that the City spend more than it brings in, which is both diametrically opposed to his self-proclaimed fiscal conservatism and prohibited by law.
WHAT ARE THE ALTERNATIVES?
During the budget committee meeting at which the draft budget was unveiled, Doug Ford (he’s a member of the committee) was aghast that City staff were unable to find an additional $19 million to finance the difference between the mayor’s desired 1.75 per cent property tax increase and their proposed 2.5 per cent increase. (Important note: this $19 million is just the difference between the two property tax rates, to cover the base budget, potential service enhancements, and the Scarborough subway. It would not cover the mayor’s additional hopes to cut the land transfer tax and freeze Metropass prices.)
In the absence of a plan for generating new revenue, what’s needed is a decrease on the expenditure side of the equation. Doug indicated that in a $9.6 billion budget, it should be easy to find this money. It is not.
Remember that process for the 2012 budget, with that substantial public pushback against proposed service cuts? At the final city council vote, the services that wound up being saved were worth about $19 million. Using that list, here’s an example of the cuts council would need to make to achieve the mayor’s property tax goal:
- End TTC Wheel Trans service for dialysis patients ($5 million)
- Cut additional funds from Toronto Public Library ($3.9 million)
- Eliminate some social service and health program grants ($2.3 million)
- Close three homeless shelters ($1.97 million)
- Reduce child care subsidy ($1.72 million)
- End free registered programs for children and youth in Priority Centres ($1.3 million)
- End programming at five school pools ($683,500)
- Reduce child care programming ($670,000)
- End mechanical leaf collection in suburbs ($510,000)
- Eliminate three positions in the Toronto Environmental Office ($323,000)
- Reduce ice rink arena programming ($260,000)
That’s not quite $19 million, but it’s close. And those are not easy decisions to make. Keep in mind that these were the final items on the table proposed for cutting after a year of research and debate. Mayoral bluster aside, cutting municipal programs is difficult, in large part because so many services are mandated, and the ones that are not are demonstrably valued by residents.
To answer Doug Ford’s question: the mayor already tried to cut the relevant amount from the budget and was overturned by his colleagues in the wake of massive public opposition.
THE ROB FORD PROBLEM
There are many reasons to oppose Rob Ford. You may have seen some of them in the news recently. But there is an essential, inescapable truth that goes beyond his behaviour: Rob Ford’s arguments, and his math, do not add up. They do not add up when he falsely claims he has saved a billion dollars, and they certainly don’t add up on a back-of-the-napkin budget proposal that promises the impossible. Perhaps this is because of his liberal relationship with truth-telling, or maybe it is because he fundamentally does not understand how the institution he leads actually works.
Stripped of his powers, the mayor is reduced to his ability to shout—which is, to be fair, considerable. But his message does not merit real consideration. If anything, treating it seriously worsens our understanding of Toronto’s finances. The sooner we recognize that the mayor’s dishonesty and misdirection is not limited to his personal life but extends to his policies, the sooner we can move on to a meaningful discussion of what we’d like to see in the budget—and the sooner the budget can be about Toronto and not Rob Ford.