September 12, 2010
Among challenges confronting Toronto’s next mayor, none looms larger than fixing a chronic budget shortfall that if left to fester will ultimately threaten the city’s well-being. Yet with just six weeks remaining before election day, none of Toronto’s leading mayoral candidates has adequately addressed this issue.
That’s not to say they have been silent on fiscal matters. Quite the contrary. There have been promises of tax cuts and service expansions, hiring freezes and asset sales, all spiced with repeated vows to “cut the fat” at city hall. Little of this addresses the depth and breadth of Toronto’s budget mess, however.
Simply put, this city routinely spends more on programs and services than it raises through property taxes and user fees. The result is a nagging annual shortfall that has run in excess of $400 million. A balanced budget has traditionally been achieved through a blend of dubious bookkeeping tricks, raids on Toronto’s dwindling reserves and last-minute bailouts from Queen’s Park. But there is a limit to these options. Fresh injections of provincial money are especially unlikely given Ontario’s own budget woes.
Next year’s municipal shortfall is tentatively pegged at $250 million. In other words, Toronto’s next mayor and council can expect to start their budget deliberations a quarter-billion dollars in the hole. It’s likely to get worse in years to come. Yet candidates persist in ignoring this elephant in the counting room.
Front-runner Rob Ford proposes to dig the budget hole deeper by killing Toronto’s land transfer tax and motor vehicle registration fee — measures that together pump more than $200 million into the city’s coffers. He does propose some spending cuts. But downsizing city council to 22 councillors from 44 would save only about $15 million a year. Other proposed cutbacks, like slashing councillors’ travel and offices expenses, would save even less. Meanwhile, the chronic shortfall goes unaddressed.
George Smitherman, polling in second place, has vowed to cut the motor vehicle registration fee by one-third and trim city councillors’ travel and office budgets — measures appearing to mimic Ford’s approach. Indeed, Smitherman goes a step further by promising to freeze property taxes for one year. At the same time, he wants municipal incentives for green jobs and subsidies for businesses hiring young people. As of yet, it doesn’t add up.
Candidates Rocco Rossi and Sarah Thomson both want key services like garbage collection contracted out to the private sector. But that likely wouldn’t happen for years, given existing collective agreements, and the potential savings are unknown. Thomson also wants to freeze property taxes for one year and cut councillors’ office budgets. Meanwhile, Rossi proposes selling Toronto Hydro to erase the city’s debt, but the resulting windfall would go to transit construction, not solving Toronto’s budget woes. In any case, it’s far from clear that asset sales would produce the $3 billion that Rossi expects. Some of the proceeds from the sale of Toronto Hydro would go to the province, not the city.
While eager to point out flaws in rival candidates’ fiscal proposals, Joe Pantalone has offered few of his own, aside from promising to keep the property tax in line with inflation. And the status quo just isn’t good enough.
Candidates still have time to present a comprehensive program addressing Toronto’s chronic budget shortfall. In fairness to Smitherman, he has promised to reveal his complete fiscal plan on Sept. 27. Fresh ideas and real solutions are needed. Without them, Toronto’s fiscal woes will surely deepen and leave the city with dwindling opportunities and an uncertain future.