A Guide to Toronto's 2014 Budget Process

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A Guide to Toronto’s 2014 Budget Process

City budget season has arrived. Here's everything you need to know.

It’s the most wonderful time of the year: City budget season. Okay, so maybe it’s not quite that fun. But it’s still a really important and meaningful process. The decisions made during the budget process will shape the City’s priorities for the next year.

Understanding and participating in that process isn’t always easy, so here’s a guide outlining how we got here, how to understand property taxes, how service levels will be debated at City Hall, and how to get involved.


HOW WE GOT HERE


Drafting the staff-recommended City budget is a long process, and it starts in the spring. Various City departments start working on their budget proposals in late May and early June. These are preliminary estimates of what amount of money each department feels it will need the following year to meet service requirements. For instance, the TTC might estimate that its ridership will increase and request more money as a result. City departments submit their proposals to the city manager around late August, and staff work with the budget committee to fine-tune them.

It’s important to remember that the first budget the public sees each year is a staff-recommended budget. That is, it’s a proposal from civil servants to council for how to meet the wants and needs of Torontonians for the next year. It’s still subject to committee and council approvals, and changes could very well be made as it goes through community consultation and the political process.


A BUDGET DEFINED BY CONSTRAINTS


The staff-recommended budget includes many components: staffing numbers, service levels, budget allocations, and the much-focused-on property tax rate.

What often goes unsaid is that most of the budget is fixed. In KPMG’s 2011 review of Toronto’s services, the accounting firm rated 90 per cent of the City’s 105 services as “core,” which it defined as “either required by legislation or essential to the effective functioning of government” [PDF]. An additional eight per cent of services—including parks, community centres, and public spaces–were deemed “traditional.” That doesn’t leave much of the budget up for debate, which can cause some frustration.

For instance, in 2011 the Toronto Police Service had a battle with the mayor’s office over the 2012 police budget. Rob Ford’s administration demanded a 10 per cent reduction, but eventually agreed to a 0.6 per cent increase. About 90 per cent of the police budget—which is by far the City’s largest single budget item—is contained in staff costs, which are non-negotiable, except every few years when the collective agreement comes up for review (and even then, they seldom go down). The other 10 per cent is mostly basic stuff, like the cost of fuel for vehicles. So the budget is relatively inflexible.

So when the City is in austerity mode (which it essentially is), Toronto’s budget becomes more about tinkering than anything else, which is why you don’t see dramatic reductions from year to year.


THINKING ABOUT PROPERTY TAXES


Much is made about what the annual property tax rate will be. It fuels a lot of newspaper articles and talk radio discussions. The reality, though, is more complicated than much of the media coverage makes it out to be.

Property taxes work differently than the income and sales taxes used by higher orders of government. Income and sales taxes grow with the economy; when inflation goes up, prices and salaries should as well.

Relative to those taxes, property taxes are backwards. Property taxes don’t automatically rise with inflation, so the City’s annual budget is about two per cent behind inflation each year to start with. During the budget process the City selects a revenue level it wants to achieve (last year’s was $3.725 billion) and then it works out a complex formula to see what property tax rate is needed to achieve that target. Here is a great explanation of property taxes—one that will make you more informed than some city councillors are.

Toronto’s property taxes are a tale of extremes. Taxes are decided on the basis of a mill rate for the City and the assessment value of particular properties. (Simplified, the mill rate is the tax rate you pay on your property. If you own a property worth $100,000 and your mill rate is 1 per cent, then you owe $1,000 in property taxes. The actual formula is a lot more complicated than this, but that’s the general idea.) At 0.79 per cent, the mill rate for Toronto is the lowest in the region by far; Hamilton and Oshawa charge almost twice that. However, Toronto’s property values are also the highest in the region, which puts the average property tax total close to the middle for the GTA. This combination of high property values and low rates makes Toronto taxes very sensitive to changes, particularly because sudden increases could price people on fixed incomes out of their homes.

All of this is to say that property taxes have to be set carefully to meet the needs stated in the budget. They can’t follow arbitrary political whims. Toronto is more reliant than most cities on its property tax base, because those taxes fund almost 40 per cent of the City’s operations (in U.S. municipalities, it’s around half of that). This is also why some people think Toronto needs other ways of raising money.


SERVICES, SERVICES, SERVICES


Taxes are just one component of making a budget. The other side of the equation is figuring out what kinds of services people want and what targeted investments are the most valuable. The current administration has consistently framed the budget debate around what cuts need to be made to balance the budget, rather than what investments would most benefit Toronto residents. This is unlikely to change. Even so, it’s useful to keep the notion of targeted investment in mind when thinking about what language is used to describe the budget.

Based on the staff-recommended budget that we have, and on previous committee discussions and public statements, we have an idea of what councillors might advocate for this year.

  • The mayor has endorsed a call for new police officers at $15 million, arguing this fulfills a campaign promise. Due to hiring freezes and officers retiring, Toronto currently has 300 fewer officers than it did when Ford took office.
  • Considering the proposed fare increase on Metropasses and tokens, some councillors might call for improved TTC service, particularly on bus routes. Over 50 bus routes had their service reduced in the 2012 budget, and crowding standards have worsened.
  • Based on a parks committee vote, council may try set aside more money for replacing playgrounds. Current funding allows for playgrounds to be replaced about every 86 years, while best practice suggests they should be replaced every 25-30 years.
  • Councillors have consistently tried to allocate more money to to the Toronto Community Housing Corporation, without much success. The housing agency faces an $860 million repair backlog, and has more than 160,000 people on its waiting list for units.
  • Despite record development, the City planning department is understaffed by 65 people. It has fewer staffers than it did at amalgamation. Council could try to correct that.
  • There are more than 19,000 children on the waiting list for City child-care spaces. Council could try to create more spots.

NAVIGATING THE BUDGET


Let’s face it: the budget is confusing. For one thing, it’s actually two budgets that we’re talking about (the operating and capital budgets), and a lot of wonky jargon gets used (but don’t worry, we have a handy glossary of terms to help you along).

First, let’s talk about the budget’s timeline.

November 25: The budget is launched at City Hall. The city manager and budget chief do presentations, and councillors ask preliminary questions.

November 25 and 26: The City hosts a budget town hall for residents to ask questions of staff.

December 2 and 3: The budget committee hears from residents about their priorities. Anyone can sign up to give a five-minute deputation to share their concerns.

December 10-13: City departments present their budgets one by one to the budget committee. Councillors ask questions.

January 8: The budget committee wraps up its part of the process. It sends the budget—perhaps with changes—to the executive committee.

January 22: The executive committee debates motions to amend parts of the budget, and then sends a version of it to council. Typically, this part of the process would be led by the mayor, but, because Ford currently has a crown without a throne, the duties will fall to Deputy Mayor Norm Kelly.

January 29 and 30: A full debate is held at city council. This is the first chance most councillors have to move a motion to amend the budget. The past two budgets have seen significant changes on the floor of council.

There are other opportunities to learn about the budget and have your voice heard. Various councillors hold town halls to guide residents through the budget process and to hear feedback. Some councillors won’t have any availability at all, but you can try calling them or sending emails to inquire.

Some local groups will also hold their own town halls and forums on the budget. These independent meetings can be good sources for targeted information. If you’re a student who cares about issues that affect youth, the Toronto Youth Cabinet is a good place to start. If you care about how the budget impacts women, Women in Toronto Politics has some material, as well as advice on how to deliver an effective deputation. Social Planning Toronto and the Wellesley Institute provide analysis of the budget through a social-justice lens, #CodeRedTO and TTCriders focus on transit issues, and the Toronto Environmental Alliance focuses on environmental issues. If you really, really want to repeal the Land Transfer Tax, then contact the Toronto Real Estate Board. It gives them purpose.

If you want to know more about how the City budget has evolved, that material is available too. The City keeps good records of previous budgets on its site (the Mel Lastman–era PowerPoint presentations are pretty funny, if that’s your thing), and you can track the history of how a particular department has been funded.

And, for your reference, here are some handy Torontoist pieces about…

…the 2014 capital budget;

Budget 2013;

Budget 2012;

…and Budget 2011.

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