Live Blog: Municipal Budget Launch 2016


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Live Blog: Municipal Budget Launch 2016

Follow the 2015 budget debate as we liveblog the proceedings with analysis, fact-checks, and context. You can also follow the livestream.

Follow the 2016 budget presentation as we liveblog the proceedings with analysis, fact-checks, and context.

It’s here! Today marks the beginning of the 2016 budget process. The budget is being announced today, and we’re here to walk you through everything from the ins-and-outs of proposed residential property tax increases (2.17 per cent) to funding increases (unsurprisingly, TTC and the TPS will see the lion’s share). Follow our liveblog bellow as we give you the context and analysis needed to make sense of this year’s budget.

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Neville Park December 15, 201510:43 am

Good morning, everyone! I’ll be doing the Budget Committee play-by-play. Right now we’re seeing presentations from City Manager Peter Wallace and Chief Financial Officer Rob Rossini, which you can download here.

Neville Park December 15, 201510:53 am

Council has asked for about $9 million worth of increases. That doesn’t include the Poverty Reduction Strategy or requests from TCHC, the TTC, and the accountability officers for more funding. With a lot of pressure on the operating budget, they’ll have to pick and choose what gets included.

Neville Park December 15, 201510:57 am

Staff have put forward two scenarios Council can consider: a residential property tax revenue increase of 2.17 per cent, and an increase of 1.3 per cent (the rate of inflation). The latter is what the Mayor would prefer, but it may not be possible to achieve.

Neville Park December 15, 201510:59 am

Staff have not built “any prudence” into their estimates for 2017 and 2018 — they need every bit of revenue we’ve got to make it work.

Neville Park December 15, 201511:04 am

“We’re seeing a push-pull between funding the city that we have, and funding the city that we want to have,” says Josie La Vita, head of Financial Planning, as she presents capital funding challenges.

Neville Park December 15, 201511:10 am

The major costs are, unsurprisingly, transportation and transit projects: the East Gardiner rehabilitation is some $3 billion gross. The Spadina subway extension is about $2.7 billion.

Neville Park December 15, 201511:16 am

Where do we get the money to pay for all this? Enjoy:

Neville Park December 15, 201511:17 am

The City risks running into its self-imposed debt ceiling in 2018.

Neville Park December 15, 201511:20 am

The City doesn’t cover all its costs from borrowing. Most of the rest comes from the previous year’s operating surplus; the rest, dividends, extra MLTT revenue, development charges, etc.

Neville Park December 15, 201511:24 am

“This is an iceberg, not a tooth, and not Africa,” says La Vita. Those numbers are in billions. That’s $22.3 billion in unfunded stuff we need.

Neville Park December 15, 201511:26 am

There’s only so much the City can borrow, legally speaking, so we have to use other strategies. “The final message here is there are choices to be made; Council has to consider where its priorities are and how to get there.”

Neville Park December 15, 201511:33 am

“It’s growing, and it’s making me a little uncomfortable with how much it’s growing,” says Rossini (of the City’s unfinanced debt). Since 2006, it’s steadily grown to almost a billion dollars.

Neville Park December 15, 201511:37 am

“Is it totally crazy to have unfinanced capital? No,” says Rossini, and explains using lots of accounting terms I don’t quite understand and will look up later. I’ll just take his word on it.

Neville Park December 15, 201511:39 am

A scenario where the City brings its unfinanced debt down to $400 million by 2020 (as Rossini wants) would put the City just over its 16.6 per cent debt ceiling, which wouldn’t be the end of the world. However, it would increase how much of the operating budget has to go to debt charges, which means more property tax revenue increases.

Neville Park December 15, 201511:41 am

“Revisit the 15% debt service to levy target as part of the Long Term Fiscal Plan” is CFO-speak for “raise the debt ceiling”.

Neville Park December 15, 201511:43 am

This is a really, really confusing flowchart that I will try to simplify later on.

Neville Park December 15, 201511:45 am

Now, councillors can ask staff questions about the previous presentations.

Neville Park December 15, 201511:49 am

James Pasternak (Ward 10, York Centre) asks where the mayor’s suggested capital levy would go to — servicing debt, or directly to capital projects. Rossini replies that it’s for Council to decide.

Neville Park December 15, 201511:52 am

Mike Layton (Ward 19, Trinity-Spadina) asks how the recently announced new mortgage rules will impact MLTT revenue, and cites the Bank of Canada’s worries about Toronto’s housing market. Are we overestimating?

Staff, in fact, don’t like banking on continual MLTT increases at all!

Neville Park December 15, 201512:07 pm

Justin Di Ciano (Ward 5, Etobicoke-Lakeshore) asks why we take in less in development charges than we spend on growth-related capital costs. The two-part answer: 1) the DC Act does have flaws; 2) Council has chosen not to charge for as much as it could.

Neville Park December 15, 201512:10 pm

The province recently passed an act reforming the Development Charges Act, which may affect how much we can make from them.

Neville Park December 15, 201512:14 pm

Joe Cressy (Ward 20, Trinity-Spadina) asks how much the Council-directed “enhancements” that aren’t included in the budget add up to. ($67 million). There’s already a $57 million gap. That adds up to $124 million.

Included in that amount: the entire Poverty Reduction Strategy. Ouch.

Neville Park December 15, 201512:16 pm

Cressy questions Toronto Police Services’ request for a 2.8 per cent increase, while many City divisions have increases below or quite near to inflation.

Neville Park December 15, 201512:23 pm

Janet Davis (Ward 31, Beaches-East York) has questions about the tax revenue increase scenarios. The 2.17 per cent increase would cover the $57 million gap in the operating budget. However, neither the 2.17 per cent nor 1.3 per cent scenario can cover the $67 million in further unfunded enhancements. (That would be another 2.5 per cent or so.)

Neville Park December 15, 201512:26 pm

Davis asks staff to confirm that the gap between the two scenarios amounts to $17.66 for the average residential taxpayer. Yes, that’s what this is all over.

Neville Park December 15, 201512:29 pm

Joe Mihevc (Ward 21, St. Paul’s) is also concerned about the unfunded enhancements, and mentions money going towards the arts (a favourite cause of budget chief Gary Crawford). He asks where Council should look for more revenue aside from the property tax base. (Staff dodge.)

Neville Park December 15, 201512:30 pm

(Mihevc was trying to get them to mention alternative revenue tools, like bringing back the [gasp!] Vehicle Registration Tax.)

Neville Park December 15, 201512:37 pm

Paula Fletcher (Ward 30, Toronto-Danforth) notes that the TTC’s and TPS’s budget increases (both are some $27 to $29 million) add up to a 1 per cent property tax revenue increase each.

Neville Park December 15, 201512:41 pm

Fletcher mentions one of the revenue tools we could implement but haven’t considered yet: a tax on shopping mall parking lots. “A bit of a free ride there, wouldn’t you agree?”

Neville Park December 15, 201512:43 pm

Questions are over; now to speeches. Di Ciano moves to limit speaking time to three minutes so we can all get to lunch sooner. Carroll tries, unsuccessfully, to shame him, warning that it sets a bad precedent.

Neville Park December 15, 201512:46 pm

Gord Perks (Ward 14, Parkdale-High Park) reels out a list of all the things the mayor promised, e. g. subway service improvements, TCHC repairs, that aren’t included in the budget. He also emphasizes that this budget includes as a base assumption that MLTT revenue will always increase. (This implies assuming that the Toronto real estate market will always increase.)

Neville Park December 15, 201512:48 pm

Cressy: “We don’t have the resources to maintain the city we have and want right now, and we don’t have the resources to build the city we want.” Yet another thing Council voted for that they can’t pay for: the blanket 30 km/h speed limit on residential streets. (It would require new signs.)

Neville Park December 15, 201512:52 pm

Mihevc says Council’s usual way of balancing the budget — moving money around, “robbing Peter to pay Paul” is “rearranging deck chairs on the Titanic”. A sustainable solution requires another revenue source.

He points out that the $67 million in unfunded services is pretty much exactly the annual revenue from the Vehicle Registration Tax. Personally, he is pushing for a $1 per parking space per year tax on commercial lots.

Neville Park December 15, 201512:56 pm

Whoops! Corbin Smith points out that I’ve been saying “MLTT” without ever explaining what it is. It’s the Municipal Land Transfer Tax and I have written a primer on it here.

Neville Park December 15, 201512:59 pm

Fletcher: “We need to keep life affordable for people in the City of Toronto…to me, we’ve gone too far.” The parking tax Mihevc mentioned would bring in $400 million a year, she points out. (That’s roughly what MLTT revenue has been in recent years.)

Neville Park December 15, 20151:03 pm

Carroll praises City Manager Peter Wallace for saying we need to think about the City’s entire revenue model. “We’ve all fought over own personal choice as the panacea,” says Carroll — adopting one or another revenue tool doesn’t change the fundamental model. The funding model was fundamentally broken in 1995 when the province pulled transit funding, “and everything since then has been someone’s goofy idea.” Our city is too big to work on merely property taxes, she concludes.

Neville Park December 15, 20151:07 pm

Pasternak says that, despite the $67 million of unfunded wants, many exciting projects are still going forward. Raising taxes just hurts seniors and working people, he adds, and when you ask people to voluntarily contribute more (it is indeed an option), they do. The annual revenue is approaching $20,000, he says. Twenty thousand dollars. The operating budget is eleven billion dollars. There’s that $22 billion in unfunded capital projects. Twenty thousand dollars. My head just exploded.

Neville Park December 15, 20151:13 pm

John Campbell (Ward 4, Etobicoke Centre) steadfastly refuses to say “revenue tools”; he says they’re just taxes and fees, and those have cascading effects that make life and business less affordable. He is also uncomfortable with relying so much on the MLTT and assuming that it will always be so high. But raising taxes isn’t the solution either: our taxes are the lowest in the GTA because “that’s how people want it”.

Neville Park December 15, 20151:16 pm

Crawford has a motion requesting a briefing note on how much all divisions and agencies spend on things like office supplies, catering, mailing, and travel. I just…let me reiterate…tens of billions of dollars…I am speechless.

Neville Park December 15, 20151:17 pm

Crawford’s motion carries. The budget committee won’t meet again until after the New Year. Well, that was certainly…a thing. Wow.