With 14 months to go until the next election for mayor, Rob Ford is practising his pitch to voters. In a speech at the downtown Cambridge Club this week, he boasted of reducing the size and cost of government, keeping taxes low, creating jobs and restoring aging infrastructure. Oh, and one other thing: reducing the debt.
“I’ll not pass the debt onto your kids or onto your grandkids,” he told the lunchtime crowd in the club’s dining room. “We are dealing with debt that has just been accumulating year after year after year after year. Well, folks, I can assure you, I’m taking the bull by the horns, and we are dealing with the debt.
“Over the next 10 years,” he said, “we are reducing our city debt by over $804-million.” That would be nice if it were true. The facts say otherwise. Finance officials report that the city’s net debt stood at $2.3-billion at the end of 2012. Under the latest 10-year budget projections, it is set to rise to $4.2-billion by 2018, then start falling and settle at $3-billion in 2023. In other words, Toronto is increasing its net debt by $700-million over 10 years, not reducing it by $800-million.
So what was the mayor talking about? What he meant was that the city plans to reduce its borrowing by $800-million. Under his administration’s fiscal strategy, the city is taking a number of steps to reduce its reliance on borrowed money to pay for expensive capital projects. It is using some money from the sale of city assets and some from development charges. Three-quarters of any year-end budget surpluses will go toward capital financing, too.
That is all to the good. Mr. Ford is right to take the new approach. But reducing borrowing is not the same as reducing debt. If you decide to use your credit card less, it is not the same as paying down your credit-card balance.
Mr. Ford’s budget chief, Frank Di Giorgio, explains. “When he says we reduced the debt by $800-million, essentially what he is saying is that the debt will not grow at the rate it would have grown. In that sense, we have avoided some debt.”
But that is not how members of the Ford camp are painting it. They often speak of cutting or “paying down” the debt. “We have the best financial record, bar none,” Doug Ford said earlier this month, when fending off reports about his brother’s drinking at the Taste of the Danforth festival. “We’re paying down the debt, at the same time putting $1.2-billion on infrastructure.”
Mr. Di Giorgio allows that even talking about lowering projected debt can be dicey. Governments often issue rosy forecasts of reduced borrowing, then miss their targets. “By the time 2020 comes around, I don’t know whether the debt is going to be what it is projected to be or not,” he says. “It’s pretty hard to predict.”
The Fords’ defenders will say that all this is quibbling. What does it matter if they gild the lily a bit when their record of managing the city’s money is generally good?
But the mayor’s whole re-election pitch is founded on the claim that he can be trusted. “You’re going to have to make a decision folks, on Oct. 27, 2014,” he told the Cambridge Club audience. “Do you trust me with your hard-earned tax dollars?”
Claiming to reduce a debt that is in fact growing is a poor way to win anyone’s trust.