Projected City Surplus for 2011 Grows to $154 Million
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Projected City Surplus for 2011 Grows to $154 Million

But will council use that money to save services currently on the chopping block?

Giorgio Mammoliti and Rob Ford during a council meeting about City-run programs in September 2011.

Every quarter, the City of Toronto releases what’s called a variance report, which measures the difference between how much the City budgeted and how its finances actually played out. There are always differences due to factors the City can’t pin down in advance: on the expenditure side, costs change based on factors like how much snow falls or how many people need to use social services; on the revenue side income fluctuates with changes in, for instance, the briskness of the real estate market.

Today the City releases the third quarter variance report for 2011, measuring the differences between projected and actual finances from January–September 2011. The key finding: right now we have $135.6 million more than anticipated, and expect, once the fourth quarter of 2011 is tallied, to have $154 million more than planned for 2011 as a whole.

The big question now is whether Mayor Rob Ford is inclined to use any of this money to save services that are currently on the chopping block.

Today’s report [PDF] also includes recommendations about what to do with the surplus, specifically:

…that the surplus be distributed in accordance with the policy approved by Council in 2004 which states that the surplus be applied in priority order to:

  • Capital Financing Reserve (at least 75% of the surplus) and,
  • the remainder to fund any underfunded liabilities and/or reserve funds as determined by the Deputy City Manager and Chief Financial Officer.

Council, of course, is entirely at liberty to disregard that recommendation—and certainly it has done so numerous times in the past—and use some of the money to forestall cuts that are currently in the draft 2012 budget. Those cuts, when the budget was first unveiled in the fall of 2011, totalled $88 million (see page 26 here: PDF)—so councillors could, in theory, restore all of those services and still put $66 million towards the reserve funds listed above. Councillors who want to save services have a much stronger position from which to negotiate now: the optics of cutting bus routes when we have a $154 million surplus are challenging for Ford and his allies, much more so than when they were scaring us all with $774 million deficits and cuts were necessary, inevitable even, if we were going to balance the books at all.

City council will debate the budget in a meeting that runs from January 17–19; it is at that time that councillors will be able to propose changes to it. Ford has said repeatedly, and recently, that his goal is to reduce and eventually eliminate the Land Transfer Tax, which is now applied to home sales and which David Miller fought bloody, bitter battles to introduce. This budget debate will be the litmus test of just how committed Ford is to that goal: if he gives ground on using some of the surplus to offset cuts, then he might be coming around to the view that the City simply can’t do without the revenue the Land Transfer Tax brings in. If he sticks to his guns, however, then it seems we’ll soon be faced with an argument that runs something like: “We can totally afford to kill this unnecessary tax—we have a surplus!” That argument, of course, will conveniently leave out the fact that the surplus was purchased at the cost of services many Torontonians value.

Ford is pretty good at sticking to his guns, and lowering taxes is perhaps the single most important political goal he has. Because of that, it’s a safe bet that it will only be by the will of centrist councillors, the ones who hold the balance of power—that are called “mushy” or “mighty,” depending on who you ask—that services will be saved this year.