The state of Toronto’s finances are the most important issue in this election.
First, let’s learn about the “structural deficit”.
Then read the following article:
Candidates, read financial statements
By SUE-ANN LEVY, City Hall columnist
Last Updated: June 29, 2010 7:29pm
The city’s consolidated financial statements for 2009 — to be discussed at audit committee Wednesday morning — should be required reading for all mayoralty candidates and would-be councillors.
What the statements show is a city rich in assets — land, buildings, vehicles, roads, watermains and transit lines — but one that is extremely cash poor, with a net debt that has risen during the past four years by an average of 12.5%.
Despite a steady stream of revenues in the form of property, land-transfer and personal vehicle taxes, ever-increasing user fees and ever more funding from the senior levels of government, the city can’t keep up with its infrastructure deficit or plans to expand the transit system.
In fact, as the report to audit committee notes, the city has a “significant net debt which must be financed through future revenues.”
The financial report also states there were some $6.5 billion in liabilities outstanding — Toronto Community Housing Corporation mortgages, employee benefit liabilities, outstanding property claims and the like — that “will be recovered from future property taxes and other revenues.”
If there was ever proof Mayor David Miller and his fiscal fruitcakes on council have mortgaged our children’s future, this is it.
There was no shortage of money coming into the city in 2009 — some $3.6 billion from property taxes, $2.9 billion from senior levels of government, $2.3 billion from user fees, $183 million from the land-transfer tax and $51 million from the personal vehicle tax.
Yet the financial statements peg the city’s debt at $3.8 billion at the end of 2009, up $292 million from 2008, saying that’s mainly due to the number of assets purchased.
But if the activity at Tuesday’s debenture committee is any indication, it’s also due to Miller and Co.’s virtually reckless approach to raising debt.
Within three minutes, Miller, city manager Joe Pennachetti and treasurer Cam Weldon approved a plan to issue a $42-million debenture to the Canada Mortgage and Housing Corporation to finance 2010 city projects. The scheme is presumably to take advantage of lower interest rates of 3.8% offered by CMHC.
After the three-minute meeting one of the finance officials was heard to say (no doubt for my benefit) the city would save $30 million over 15 years through this manoeuvre.
It’s called cost avoidance, not savings. No mention was made of the fact city officials will have, with this move, already issued $500 million in debt this year — and it’s only June.
The 2009 financial statements report the city’s net debt “substantially exceeds” the city’s reserve fund balances which are holding about $1.5 billion in total.
In addition, the statements report there are $275 million worth of outstanding liability, property and accident claims by people who are suing either the city or the TTC.
On the positive side of things, the city’s capital assets are pegged at $18.3 billion, which, according to the report, are about 85% the value of those owned by the entire province.
However, the report also notes the city spent $1.85 billion last year on new buildings and improvements (including $76 million to acquire a police training facility) — despite the constant cries of near poverty.
As I’ve consistently seen, the city’s real estate sell-offs are an embarrassingly small percentage of what is purchased.
But then downsizing is indeed a dirty word at Socialist Silly Hall.
“It’s like the best of times and the worst of times,” says Councillor Mike Del Grande of the 2009 statements.
He worries about the significant liabilities that will have to paid for by future generations, not to mention the need to pay for those subway cars and streetcars that have already been purchased.
“The TTC has got to have much, much greater scrutiny,” he said Tuesday. “It’s just eating up the lion’s share of everything.”
These statements should be required reading for any mayoralty or council candidate serious about working to put City Hall’s affairs in some semblance of order.
Quiz your candidates.
See if they care to do their fiscal homework.