A Very Special Cheat Sheet: #TObudget 2014

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1. A Note: Operating Vs. Capital
2. First, Some Context
3. Operating Budget
4. Capital Budget
5. The Most Disingenuous Game

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I don’t usually do Cheat Sheets for special meetings, but this one is for the 2014 budget! I love the budget!!! The entire exciting process, which started all the way back in November, is culminating this upcoming Wednesday in a meeting sure to be full of delightful surprises, dramatic reversals, procedural confusion, and petty, childish infighting.

A note on where I got all this: (p. 154) means paragraph 154 in this big motion. Other items come from the massive list of PDFs – each department/agency has separate reports on their operating and capital budgets, complete with service standards, staffing levels, etc. Which is way too much for one person to ever read through, so anything unlinked is from the condensed versions:

• Operating budget (boring version)
• Capital budget (boring version)
• Operating and capital budgets (less boring version)

A Note: Operating Vs. Capital

Technically, the City has three budgets: water and waste (which was already passed); operating; and capital.

The operating budget is for day-to-day expenses, like paying bus drivers. The capital budget is for long-term, big-budget expenses that we typically get loans for, like buying new buses. Later on, I’ll discuss where we get the money for each budget and how it’s spent.

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First, Some Context

• City departments are still in austerity mode, with most required to meet a 0% increase. In practice this is kind of impossible, because the price of everything goes up a little bit every year. Yes, you can scrimp and save, but for some things — paying firefighters, the Student Nutrition Program — you need a bigger budget. We are also a growing city, and more residents means more services to provide, and so we need more employees to deliver those services — or just work the existing ones a little harder. So a “flatlined” budget means doing more with less.

• We lost a major source of funding that goes to operating expenses for social housing and TESS (Toronto Employment and Social Services, which manages a hefty social assistance caseload). This adds up to an over $125M shortfall over the next few years. The official plan is “beg for them to give us our money back”.

• For those who weren’t there for the most recent Executive Committee meeting, city staff basically explained that we are so. totally. fucked. in 2015 and 2016. The road to 2023 doesn’t look too good either. Not only did we lose some funding, we also took on big expenses, like the Scarborough subway, the ice storm, and the flood back in July.

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Operating Budget

This is the day-to-day stuff. We get the money for this mostly from the province and the feds; user fees; and property taxes. Since amalgamation, the shift to depend more on user fees than taxes has been pretty dramatic. This in itself is a big issue — see Ed Keenan for an explanation of why we should be paying more attention — and I’ll talk more about the tax part later.

Oh yeah, and remember how at the end of each year they announce there’s surplus money left over? That too, but secretly.

“For a second consecutive year there is no use of prior year’s surplus as a revenue source in 2014.” This is the kind of thing that sounds good but is actually bullshit — they put the surplus into reserves, and then take from reserves to fund the operating budget, and then everyone feels better about themselves. They also refer to the prior year’s surplus, which we get every year, as “one-time funding”.

Some Things We’re Getting

• 668 new childcare spaces (p. 172), thanks to a provincial subsidy — Cllr Davis, probably the biggest childcare advocate on Council, has really been pushing for this.

• A Tower Renewal retrofit pilot project (p. 206). Okay, this is a really small item, but I love Tower Renewal.

• Funding for programs that will be a part of the future Youth Equity Strategy (p. 203)

• Two new libraries, at Fort York and Scarborough Civic Centre

• 13 new positions in the woefully understaffed planning department

Some Things We’re Not Getting

Nobody likes enumerating budget cuts. You have to look at the analyst notes for each department and the staffing level charts to get a good picture.

• 311 is real bitter about having to do more with less. There’s rising (and unpredictable) demand for the service, but they’re not getting any new customer service reps or development initiatives.

• Quite a few permanent positions in Fire Services are on the chopping block, but they ain’t going easy. By the way, Cllr Doucette is the go-to person to ask about the fire budget.

• TESS (Toronto Employment and Social Services) is kind of a mess?? Funding for the Housing Stabilization Fund (formerly the Community Start-up and Maintenance Benefit) has dried up and they’re budgeting less and less for it each year. The need for medical benefits exceeds the funding cap by about $1M. Also, there’s a lot of policy changes to social assistance and administrative costs are being uploaded and stuff.

• The Ombudsman’s office is down one employee, probably out of pure spite.

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Capital Budget

This is the long-term stuff. We get the money for this from the province and the feds; our reserves; “capital from current”, which means taking a chunk of money from the operating budget; charging developers to put up new buildings; selling off our stuff; and good old loans.

Just like how the City isn’t “supposed” to use the previous year’s surplus for operating costs, we’re not “supposed” to take on more debt. It wouldn’t actually be such a terrible thing because it’s pretty cheap for us to borrow money right now, but the Powers That Be have declared that debt should be our last resort for capital funding.

As a result, we’re increasingly paying cash for our long-term investments. For last year’s budget process, Matt Elliott wrote a column all about why this is a bad strategy. Anyway! On to the big, scary numbers!

• The City spends a whopping 73% of its capital budget on transit and transportation. And it’s still not enough. The TTC has a $2.5B funding shortfall over the next 10 years.

• In the meanwhile, the TTC has to scrape away at its budget. Some of the cuts include $1.5B of the money set aside for new subway cars, streetcars, and buses; $112M for fixing up stations; and $240M to make the system more accessible.

• Building the Scarborough subway (if that ever does happen) will cost close to $3.5B. Of that, the City is planning on chipping in $910M; the rest is from the province and the feds. This is on top of all the other transit expenses.

• We have a massive SOGR (state of good repair) backlog — that is, things to fix — and not quite enough money to deal with it. Over 10 years we’re looking at about $2B worth of repairs, not counting what we can already pay for, if I’m reading it right.

So what is getting done? A few highlights:

• Whatever the hell they decide to do with the Gardiner Expressway

• Revitalizing Union Station, Nathan Phillips Square, the Reference Library and more

• More fire stations, as well as new gear for firefighters and EMS

• Adding 11 new or expanded community centres over the next 10 years

• Dealing with damage from the July 2013 flood ($63.9M) and the recent ice storm ($93.9M) (p. 332, 333)

• Putting more City services online — e. g., so you can apply for a Noise Exemption or book a social assistance appointment with less hassle

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The Most Disingenuous Game

So, what’s next? Well, City Council gets to amend and vote on the budget this Wednesday. There will be a lot of back-and-forth as councillors try to get some extra cash for their pet project or cut spending they feel is unnecessary. However, any changes won’t be hugely dramatic — the budget doesn’t actually have that much wiggle room.

One of the most important things Council does have power over is the tax rate. Property taxes and the Municipal Land Transfer Tax are still a significant source of operating (and, remember, therefore capital) revenue. Our property tax rate is the lowest in the GTA (for a thorough explanation, see David Hains’ article. Increasing tax revenue is one way we could pay for those things that are getting cut or postponed.

The problem is that many councillors will do anything to avoid raising taxes, even if it means delivering an unbalanced budget — and then, when reminded that a balanced budget is required by law, making a complete break with reality and prancing off into a sparkly pixie land where unicorns poop money:

The budget became unbalanced when the executive committee voted 6 to 5 to increase the revenue expectations for the land transfer tax by $11.8 million to drive down the property tax hike to 1.75%. At the same meeting they approved $4.8 million in additional spending also funded by higher revenue from the land transfer tax.

When everything is totalled, the budget assumes $8.1 million more in land transfer tax revenue than the highest staff estimate of $350 million. The original budget conservatively estimated the city would only bring in $335 million in LTT revenue.

“Gee, I hate raising property taxes. Wait! If we get a lot more money from the Land Transfer Tax, we wouldn’t have to raise taxes as much!”

Staff: “Sorry, you’d have to bring in $358M, and we estimate LTT revenue will be $335-350M.”

Normal Human Being Logic: “Oh. I guess that idea won’t work.”

City Councillor Logic: “Well, I move that we estimate LTT revenue to be $358M!” (p. 166) *~Reality reshapes itself accordingly~*

Oh, City Council! You never cease to surprise me in new and horrible ways. I’m sure Wednesday will be a laugh riot. KILLLL MEEEEEEE

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Thank you for joining me on this wonderful trip through our municipal budget. As usual, if I got my facts wrong or missed something noteworthy, let me know!