Toronto's top bureaucrat tries to instill some budgeting reality

Residents of Canada’s largest city can’t continue to pay the lowest property tax rates while enjoying the highest service levels in the region.

Thestar.com
May 25, 2016
By Royson James

The new tamer of the lions was in the city hall den Tuesday, wrestling with the political jungle cats, trying to coax sense out of a pride governed by animal instinct that values self-preservation above all.

Property taxes, bad. Rrrrrrr.

Let the provincial government pay for it!! Grrrr.

Can’t we cut and save? Otherwise, we’ll tax our seniors out of house and land. Rrrrr.

Pity Peter Wallace, the new guy on the block. After Shirley Hoy and Joe Pennachetti, the new city manager is trying to impose rigour, common sense, good fiscal management, budget reality and tough medicine without being devoured by his political masters.

It’s a heroic attempt. Normally, the senior bureaucrats in his position wait until they are so established and ensconced in the city woodwork that they muster the courage to speak hard truths. Wallace has plunged in head-first in his first year as head of the city’s workforce.

Fresh from a stint as a senior bureaucrat at the province, Wallace doesn’t know enough to know better. But he knows he can’t just be right, as everyone listening knows he is. He also has to be able to move the needle, and that means getting city council to swallow the pill that will usher in a more stable, sustainable future.

His report, the latest in a decade-long update and accounting of Toronto’s long-term fiscal prospects, reads much like the others. The message, though, should resonate now. Every year, the case is clearer. Toronto cannot continue to charge the lowest property tax rates while providing the highest service levels, running the country’s largest city and serving as the heart of a region that is one of the nation’s calling cards.

What, are you going to wait till it crashes? Oh, yeah, he’s crying wolf.

Speaker after speaker from the public cheered on his report and urged the city’s executive committee to listen to the commonsense approach. By day’s end, Mayor John Tory - who should be leading the charge - stumbled over a five-minute list of questions that achieved little except to remind everyone that he is not the mayor to put Toronto on a fiscal footing that will sustain it for the next 50 years.

Yes, city council, over the past six years, found budget efficiencies, and staff can always find more. But the bottom line is, property taxes should have risen higher over that time - to pay for the very programs and service enhancements the politicians insist their constituents demand.

Instead, council pushed staff to concoct its perennial brew of voodoo economics and budgeting hocus-pocus, to hide the shaky foundation of this premise: that you can have a great city without paying for it.

As Tory cross-examined Wallace, asking about efficiencies and city council’s habit of making decisions without any idea how to pay for them, one wanted to shout:

Hey mayor, you just made the TTC free for kids under 12. Doesn’t that cost money? You talk about poverty reduction and a housing plan. And you want a new Gardiner Expressway. And SmartTrack? Where’s the money coming from - if not from taxes?

It was left to Councillor Pam McConnell to offer Wallace succour: “It’s difficult to speak truth to power,” McConnell said after Tory’s interrogation.

Besides low property taxes, Toronto has subsisted recently on fool’s gold - a historic and unprecedented period during which almost all the variables have been positive, including an improving economy, which means fewer people on welfare.

The report from city manager Wallace says these “unique conditions (over the past six years), which are not likely to persist,” include:

• The real estate windfall, with almost a quarter of the city’s net tax revenues coming from the land transfer tax.
• TTC revenues, primarily fare increases, accounted for $303 million, while property taxes earned $237 million.
• Provincial takeback of social services costs saved Toronto $180 million.
• Decisions to defer major city-building projects, many of which are now pressing, to the point that the “unmet needs” total $29 billion.
• Massive hikes in water, solid waste and parking rates ($473 million) and a significant jump in user fees and permits ($111 million).

In short, while city councillors trumpet their prowess in keeping property taxes low, they are jacking up other taxes masquerading as fees, and living off boom times and a positive political relationship their predecessors created with the provincial government.

In such a Shangri-La, nobody wants to hear that it will end.