Eventually, we’ll all have to pay for this

City hall can't put off the inevitable for much longer; with taxes the lowest in the region and demands growing, politicians will have to reckon with reality.

Thestar.com
May 28, 2016
By Royson James

In case you missed the essence of Thursday’s column, to recap:

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

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

But it will. The Big One will hit California one day. Toronto’s real estate boom will go bust one day, and young people will catch their breaths and probably be able to afford a house. The Leafs will win the Stanley Cup again, though probably not in your lifetime.

The problem is all those eventualities create a kind of self-fulfilling prophecy that allows us all to go, from day to day, resigned to, if not contented with, the current reality.

As this relates to the city’s finances, we think that warnings of a budget meltdown or the piling up of debt, or the growing mountain of unfunded projects, or the folly of depending on high real estate values to finance city services, are just perennial political puffery.

We get used to it. We don’t believe Armageddon is near. And if it is, we’ll find a way to survive; we always do.

Survive we will. Other cities have faced similar fiscal ruin and they survive. Just look at Detroit.

The message from our city councillors, led by the mayor, should be: Look and recoil, please. Instead, too often they pander to the citizens who suggest we can have a great city for the next to nothing we pay in property taxes. (Relatively speaking, of course).

That is not a total condemnation of city councils. In fact, civic representatives reflect what they hear at the door, at community meetings and from the daily chatter that forms the civic narrative. Around here, the conversation has been dominated by those who peddle the lie that the city bureaucracy is bloated and we can afford all we need and want by inhaling strongly and tightening our spending belt.

After amalgamation, Mayor Mel Lastman froze property taxes for his first three-year term. David Miller opened the spending tap - but used provincial money and reserve funds and created a solid waste utility to camouflage taxes as utility fees.

Miller, in fact, is most responsible for putting in place the layers of insulation that have created a false sense of security. His actions were entirely understandable, demanded even. Public sentiment wanted property taxes to stay at inflation, but citizens wanted services and entitlements whose costs galloped ahead of inflation. Something had to give.

Miller asked for more sources of revenue. The province relented. The land transfer tax was born. It’s been the city’s savior. It is unlikely to keep increasing at levels seen over the past three years. And when it stalls, where will we get the shortfall?

That’s all city manager Peter Wallace is saying in his fiscal direction report to Toronto council. Think of the future without land transfer taxes at $527 million. Was it fair to raise more money from TTC fare hikes and ridership growth ($303 million) than from property taxes ($237 million) over the past six years, when TTC riders tend to be poorer and in greater need of support from the entire city? How is it possible that Toronto has the lowest taxes of the Toronto-centred region - by any measurement?

Throughout the 1990s, this newspaper and municipal advocates across the country argued loudly that the provincial and federal governments should give cities a new deal. Funding to fix Toronto’s Waterfront followed. The feds started slowly releasing more funding. Ontario, under Dalton McGuinty, gave Toronto new spending powers and a City of Toronto Act.

Miller was the mayor who reaped the hard-won benefit.

Mayors since then have not carried the torch.

The most disappointing day in decades of covering city council was the day our local politicians turned down every one of the revenue tools city manager Joe Pennachetti had offered up as options to spread the fiscal burden of running Canada’s largest city.

Toronto begged and pleaded with the province to give her spending powers. Apart from the land transfer tax, council has blinked at using them.

The choices are simple:

• Raise property taxes or ding specific segments of the city with taxes disguised as user fees. Only, there is a limit to the deception.
• Sell off assets.
• Or devastate city services with huge cuts.

Unless led by some bold mayor with an eye to the city’s future, not re-election, city council will not act until the hounds are actually at the door. Till then, the Peter Wallaces in the curved towers at city hall can only prepare the rescue plan for the inevitable.

It will be the same old road map.