It’s time to invest in the Toronto we want

Toronto’s government has a long list of things it has committed to do, and refuses to raise the money necessary to do those things

Thestar.com
Oct. 19, 2016
By Edward Keenan

“We are driving down a dark dirt road with only our parking lights on.” That’s Toronto’s city manager, Peter Wallace, at his address to the Institute for Municipal Finance and Government, describing the budget process he leads under the instruction of the mayor and city council. That’s certainly one way of putting it.

If that metaphor didn’t grab you, he had others. “We can no longer kick the can down the road,” he said, as he has before. He showed a slide in his presentation of an iceburg, with the massive part underwater representing the city’s $29 billion worth of approved capital projects that currently have no source of funding. At another point, he compared members of Toronto’s government to “very heavy smokers” because they constantly engage in risky, potentially deadly behaviour and say that since doing so hasn’t killed them yet there’s no need to change.

A guy in Wallace’s position needs to get creative with his expressions, because otherwise he’s just repeating himself. That Toronto’s government has a long list of things it has committed to do, and steadfastly refuses to raise the money necessary to do those things, and is basically MacGyver-ing fixes together year by year rather than engaging in any effective long-term planning. Former city manager Joe Penachetti delivered much the same message in his speeches in the last few years before he retired. You cannot build and maintain the infrastructure of a growing global metropolis using rubber bands, band aids, and paper clips you find in the back of the drawer, and you can’t budget with one windfall tax tied to the fortune of the real estate market, insistence on cutting the stationery budget and whispered prayers that the provincial or federal governments will finally, suddenly drive in with a dumptruck full of cash.

But costs have gone up because of inflation, new programs have been launched with broad political support, massive new projects have been added to the tab. And taxes have been cut, essentially-raised by less than the rate of inflation - in a city that has the lowest municipal tax rates of any city in the region and of virtually any large city in North America.

At some point, you need to either raise the money to do what you want to do, or you need to make a painful decision to do less. The title of Wallace’s talk was “What we do is what we fund.” Pretty simple.

But for years, politicians (not just infamous mayors, but a great bulk of city councilors too) have insisted we can do things without funding them. They use mystical incantations like “efficiency” and “waste” to say that we can cure what ails the city’s budget. We have drunk that snake oil - and some of it addressed some of our symptoms, for a while, as Wallace’s presentation shows the tens of millions in budget cuts and efficiency savings that have piled up over the years. But the illness persists, in the form of what city managers call long-term structural problems in the budget. The cure for that is new revenue.

What may be new - or newly blunt - in Wallace’s talk is his frank admission that it isn’t going to happen. First of all, it’s too late for any new kinds of taxes or “revenue tools” to have any effect for 2017, because they can’t be implemented fast enough. And second of all, neither those tools nor plain old property tax increases are “yet acceptable to council.” They are needed, but they will not come. This was Wallace’s read of the political landscape. So the city will likely need to raid reserves or otherwise “bridge” its financial gap with more risky, unsustainable, short-term measures.

Wallace’s dose of pessimism - realism? - about the level of either spinelessness or obliviousness afflicting his political masters comes at an interesting time. Because Mayor John Tory has, for months and months now, been rhetorically engaging in a kind of a dance of the 7,000 veils, teasing an embrace of revenue tools that will fix this problem.

In July, speaking with the Toronto Star editorial board, Tory scoffed that a 5 per cent property tax increase would bring in a mere $150 million a year, and the city needed far more than that, and he vowed then he’d be supporting a suite of measures to bring in what was needed. “Watch what I do,” he challenged disbelievers then.

Two weeks ago he addressed the City Age conference, and his prepared speech asked, “Are we going to get serious about investing in the future we want? To put it in plain language: are we prepared to pay for the things we know we need to build?” His answer to those questions, in that speech, was yes.

To the Board of Trade in September: “I’m going to be honest about what is necessary,” he said. “That means dedicated sources of revenues.” And then, “I will be supporting a range of measures which are designated to specific operating pressures or capital projects. I will be asking for measures which are fair an effective. And I will be looking for ways in which we can capture value from our existing assets.”

That last sentence has been read as meaning selling part of Toronto Hydro, which is a proposition we can weigh if it comes forward formally. But the rest of it seems pretty clear: Honest ways to pay for all the things city council wants and needs to do. A range of measures - taxes and other revenue tools. Coming this fall.

Of course, all this time, Tory has also been insisting that budgets can be cut 2.6 per cent in every department, a request many have warned is near impossible to do without jeopardizing services. All of this is coming to a head. All of it coming to a debate at a City Hall near you very soon.

Wallace says it: we can’t kick the can down the road any more, though he also seems to fear we will try to do just that. The mayor has made some pretty categorical comments that he will not engage in the same old dodge, but has also long engaged in the old game of hunt-the- wild-efficiency.

It’s just about time - past time - for the teases and vague promises to end and the concrete proposals to begin. And then, I suppose, we’ll know, if the Mayor has the courage to raise the funds to do what we all want to do, and whether city council will support him if he does.

So many speeches, years of speeches, leading to the same conclusion. But as Wallace’s speech title suggested, budgets are where the real stories begin and end.