The Preliminary Budget Conversation Toronto Needs

City Hall's preliminary budget may not be balanced, but it's honest. That's a good change.

By Daren Foster (aka City Slikr) • Photo by Andrew Louis

City Manager Peter Wallace (left), Financial Planning Director Josie La Vita (Centre), and Chief Financial Officer Rob Rossini (Right) outline the state of the 2016 budget.

In what’s referred to this year as a “Preliminary Budget” instead of what the “Staff Recommended Budget,” City staff crunched the numbers on both the operating and capital sides of the ledger and delivered up a document that, at first glance, didn’t scare the hell out of everybody. The opening pressure on the operating side seemed highly manageable. It’s $57 million, and bringing in Mayor Tory’s proposed residential property tax increase at the 1.3 per cent rate of inflation knocks it down to just $23 million. If the property tax revenue increase is a relatively meagre 2.17% rather than 1.3 per cent, it eliminates the opening pressure altogether.

But here’s where the budget is qualified as only ‘preliminary’ and not ‘staff recommended.’

City staff did not eliminate the operating deficit as it has done in previous years. Instead of recommending a property tax revenue increase for city council to essentially rubber stamp, staff essentially threw down the gauntlet, as City Manager Peter Wallace indicated would occur earlier this month at his fiscal foundation presentation at Executive Committee. Here’s the revenue you have. Here are the things you said you want to have. You, city council, decide on how and what gets funded. You balance the books, not staff.

Oh, and one last thing, and it’s a big one: there’s an additional $67 million of requests and directives from council that staff have yet to find any funding for. TTC service improvements like early Sunday openings. About $20 million worth of the Mayor’s proposed Poverty Reduction Strategy. Unfunded. In reality that makes for a $124 million opening pressure before you start factoring in property tax rate increases.

And hey, let’s not even get started on the $22.3 billion in unfunded capital expenditures city council has thought would be nice or necessary but conveniently forgot to find funding for.

Lest you think I’m all gloom and doom here, that is not my intention.

This approach by staff to start the budget process in the hole, unbalanced, forces city council to put its collective money where its mouth is. For too long, too many of our local representatives have drawn up grand Wish Lists, amassing proverbial castles in the sky (and subways in the ground) without ponying up the cash to pay for it. Worse yet, they have shut down sources of revenue in the name of Respecting The Taxpayers.

Well, not this year, not if city staff has their way. With this year’s preliminary budget introduced not balanced, staff is attempting to smoke out councillors from their respective hiding spots. You want to keep taxes low and refuse talk of any other new sources of revenue? What are you going to cut? What services are you going to deny or take from city’s residents? You want to help people lift themselves out of poverty? You want the trains to run on time and not over-capacity? How much do you want to increase taxes (above the rate of inflation, by the way)? Do you want to have another discussion about new revenue tools?

City councillors can no longer have it both ways. That is exactly how Toronto has found itself with a mountain or two of unfunded liabilities and projects waiting in the wings. False promises of grand services, a world class city with low, low taxes. Efficiencies will pay for that, with a little dose of capital from current. All good.

As city staff made clear today, it isn’t all good. If they have their way, 2016 will be the year city council will finally have to either put up or shut up.

There is no longer anyplace councillors can hide, and the city’s budget is better for it.