Think tank C.D. Howe Institute gives Toronto “F” on budget process
A report to be released Thursday says Toronto waits too long to pass its budget and doesn't give residents enough data.

thestar.com
By David Rider
Nov. 23, 2016

The City of Toronto has received a failing “F” grade for its budgeting and public disclosure of financial data.

Toronto-based think tank C.D. Howe Institute put Toronto at the bottom, along with Winnipeg, in a ranking of 25 Canadian cities in a study being released Thursday.

Other GTA municipalities fare better, with Brampton and Halton both topping the list - tied with Vancouver, Halifax and Calgary - with a grade of A-. York Region got a B+, Markham and Peel both got Bs, Vaughan received a B- and Durham barely passed with a D+.

The report says “nearly all Canada’s larger cities obscure financial reports” and that “inconsistent presentation of key numbers in budgets and end-of-year financial reports hamper legislators, ratepayers and voters seeking to hold their municipal governments to account.

“Simple questions like, “How much does your municipal government plan to spend this year?” or “How much did it spend last year?” are hard or impossible for a non-expert citizen or councilor to answer.”

In particular, C.D. Howe Institute took aim at municipalities that present gross, rather than net, figures in budgets that understate both spending and revenues. Past Toronto budget materials have presented both gross and net, the report states.

The researchers also scolded local governments which use cash accounting - recognizing revenues when cash is received and expenses when they are paid - rather than accrual accounting, where revenues and expenses are recorded when earned, no matter when the money is actually received or paid out.

“By using cash rather than accrual accounting, cities exaggerate the costs of investments in infrastructure, hide the cost of pension obligations, and make it hard to match the costs and benefits of municipal activities to taxpayers and citizens,” the report states.

Toronto is criticized for waiting several weeks into the fiscal year to set its budget - council won’t pass the 2017 spending blueprint until mid-February - and for providing “little information in reader-friendly form.”

Also, researchers say, Toronto does not publish its end-of-year financial reports until well into the following fiscal year and those reports are not presented on the same accounting basis as the budget.

“Brampton, Calgary, Halifax, Halton and Vancouver . . . stand out for approving their budgets before the start of the year,” the report states, “and their financial statements quickly, presenting useful reconciliations between budgets and financial reports, and showing single gross expenditure totals as the overall fiscal footprint of their cities.”