Another year of grinding it out on the budget front

The 2017 budget continues to put off many difficult decisions.

Thestar.com
Dec. 6, 2016
By Edward Keenan

And so, after months of ominous talk about finally having an “adult conversation” about city finances and how we “cannot keep kicking the can down the road” and discussion of revenue tools and so on, the preliminary city of Toronto operating budget was presented Tuesday. In the end, it will likely be a relatively status-quo affair. The can will be kicked in defiance. Property taxes will not be hiked, services will not be slashed. Another year of grinding it out.

Which is not to say you won’t hear a lot of drama between now and the time the budget is passed by city council. Indeed, the debate starts with a major problem in need of resolution: a $91 million “gap” to be filled, either with spending cuts or tax increases - and another $13.5 million in unfunded, council-approved measures such as child care spaces and school nutrition programs that are unaccounted for.

The budget also contains conflicting high-stakes set pieces - a monster for every dimension of closet. You’ve got the damsel tied to the railroad tracks on one page, in the form of $72 million worth of service cuts for consideration, including retiring fire trucks, cutting library hours and closing wading pools. You’ve got the villain twirling his moustache menacingly on another page, in the form of the possible revival of the despised vehicle registration tax.

And yet, when you look close, you see the most likely method the mayor and his budget committee are planning to use to once again emerge, like Houdini, from the complicated straightjacket it appeared bound by and shout “ta-da.”

First, take the $91 million gap and add the roughly $13.5 million in service enhancements city council has already approved (including the scheduled enhancements to the mayor’s much-bragged-about anti-poverty program), and you have a shortfall of $104.5 million.

Now, look at the “revenue options to be considered” and add up the ones the mayor and his executive committee have already either supported or seemed open to supporting: a commercial rate adjustment; harmonizing the land transfer tax rules with the province; ending the tax rebate on vacant property; and a hotel tax: it adds up to $96.8 million in projected revenue for next year.

Prest-o, change-o: suddenly the budget gap is down to $7.7 million. And just as suddenly, instead of debating child care spaces, we’re down to considering things like “Nuit Blanche enhancements” and whether to cut the grass alongside city roads five times per season instead of six or seven. Or a 0.25 per cent property tax increase. I’m saying, $7.7 million is not a hard number to solve in a $12.2 billion budget, really.

To be sure, some will be loudly objecting even before you read this to the approximately $10 million in program cuts already included in this budget, but even the most dramatic seeming of these (ending the “cooling centre” program on hot summer days, closing the rope maze at Centre Island) seem less than severe when you look at them closely (staff say neither of those programs was attracting much use - in truth they are insignificant in budget terms and are recommended for closing because staff don’t feel they’re effective things to do.)

One possibly significant red flag is an approximately $35 million move the TTC tried to make by transferring costs to the city’s capital budget, a move the city has denied it in the preliminary budget. According to transit expert and blogger Steve Munro, this means the TTC board may have to find that money through service cuts or fare increases - at the least, it remains a question mark for now.

And in the meantime, heading off drama, this budget continues to put off hard decisions on many fronts. It does so by using $100 million in “bridge” measures that will come back to haunt next year’s budget, including deferring $72 million in needed financing for community housing and a $14 million TTC draw from its reserve funds.

This budget also continues - and extends ever further - the city’s reliance on land transfer taxes, which have reached record highs alongside the hot real estate market. The city is banking on that market to stay hot. A real estate crash could leave a crater in the city’s budget hundreds of millions of dollars deep, and even a slowdown could provoke a crisis.

Meanwhile, as the mayor talks about city building while proposing revenue for long term capital expenses (which is good), his budget here neglects ongoing crises in delivering basic services to residents: the planning department is so understaffed it cannot keep up with development applications; the TTC is famously not in a position to keep up with service demands for things like working fare machines or air conditioners; and so on and so forth.

It is not a budget to provide better services to the people of Toronto, in other words. And it is not a budget that substantially improves the city’s financial stability. But it is not a budget that controversially raises taxes very high, and it is not a budget that slashes services either. It is a budget that grinds out another year by heading off the most difficult controversies.

The budget magicians wriggle out of the straightjacket again, even while ensuring an even more elaborate straightjacket is prepared for next year.