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Numbers Game

The Toronto City Budget Deficit that Wasn't

by Toronto Media Co-op

PHOTO Wellesley Institute
PHOTO Wellesley Institute

Toronto - The City budget is not and has never been in a financial crisis according to figures released by the Wellesley Institute, an urban health research and policy institute in Toronto.

“Why do you think we’re in this mess? How did we get a structural deficit?” were phrases repeated by Doug Ford constantly at budget deputations in early December. Ford, the mayor's brother, is the committee’s vice-chair.

Ford, along with the rest of the administration's allies have often repeated the $774 million deficit number as the current shortfall that has to be covered in order to balance the city budget. The perceived 'high number', along with proposed major cuts to key services such as childcare, nutrition programs and libraries, have scared a number of residents and prompted a backlash. This has allowed the Ford administration to promote a wider range of smaller cuts with less backlash.

"They played it beautifully," said Gord Perks, councillor for Parkdale-High Park, a vocal critic of the mayor.   

However, documents published by the Wellesley Institute show that the $774 million number is mostly spin. Since 2007, the annual City shortfall has started out at between $600-$800 million.

The repeated deficit is less due to spending and revenue problems with the City, and more to the lack of legislative powers available to the City of Toronto and the nature of the way that the City operates it budgeting process.
 
The Wellesley Institute has shown that, over the past five years, the City budget has been balanced through a combination of prior year surplus, funding from other levels of government, cost cutting, increased City revenues and dipping into reserve finds.

In addition, they peg the current shortfall at roughly $176 million if no tax increases are included.   This includes the current state of salary and benefits, the prior year's surplus, the TTC fare increase, the tax stabilization fund, growth in property and land transfer taxes, other revenues and cost reductions.

The irony of the $774 million shortfall number is that it has been exacerbated by the Ford's decisions to freeze property taxes in 2011 and eliminate the vehicle registration tax. If property tax increases were maintained at the GTA average (3% a year) and if the vehicle tax was not eliminated, no cuts would be necessary.

Even more shocking is that, even without the lack of tax revenues, the Ford administration is making the shortfall worse by putting $139 million in revenues into a surplus rainy-day fund and by paying down debt.  

The change in budgeting priorities has been hailed as a "sea change" by the Toronto Board of Trade. However, the new priorities are at odds with documented priorities for residents.

“So we haven’t overspent for the last seven years, I guess,” Doug Ford said at budget deputations to Robert Cerjanec, a university student union representative. “Do you have any solutions to help the problem?”  It was a question asked repeatedly by Ford-allied councillors.

Surprisingly, neither Cerjanec, nor most of the 300+ deputants referred to the Mayor's own Core Service Review consultation.

The consultation, which polled over 13,000 Torontonians in depth-on their budget priorities, found that participants overwhelmingly supported increasing "property taxes to keep the same level of City services." 

Not increasing "user fees or taxes even if this means reducing the level of service" had the least support. The mean recommended "property tax increase for all participants was 5.15%." 

 


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