Should the federal and provincial governments help Toronto pay the cost of the ice storm? City hall naturally says yes.
A staff report estimates the storm will cost Toronto $106-million. Add in the $65-million cost of a damaging rain storm on July 8, and the city is on the hook for $171-million in unanticipated expenses.
That’s a big burden for a city straining to control costs, but it is not at all clear why Ottawa and Queen’s Park should ride to the rescue. They are struggling, too. Both are striving to wipe out big and persistent budget deficits. Why is it their responsibility to bail Toronto out?
Toronto often boasts that it is the country’s sixth-largest government and North America’s fourth-largest city. Its proposed operating budget for 2014 is $9.6-billion and its tax levy $3.7-billion. Despite its financial struggles, it is hardly a pauper.
Just a day before calling for storm-recovery aid, Mayor Rob Ford said that the city could find an extra $50-million in budget savings “easy” to allow a smaller tax increase than staff have proposed. Yet the city wants senior governments to cover fully two-thirds of its storm costs.
“We cannot put this on the back of the taxpayers,” Mr. Ford says. Well, where does he think the federal and provincial aid would come from? If those governments give in to Toronto’s demand for help, they will not be pulling the money out of a hat. It will come, ultimately, from taxes. As Mr. Ford himself likes to say, there is “only one taxpayer.”
Toronto argues it should be eligible for money from the provincial government’s Ontario Disaster Relief Assistance Program. But as the city concedes in a report on the matter, “ODRAP is geared towards small and typically rural municipalities who do not have the financial capacity to address an emergency situation.” The published guidelines for the program make it clear that aid will be forthcoming only “when damage is so extensive that it exceeds the capacity of the affected municipality to manage.”
That clearly is not the case here. Toronto has $30-million in reserve funds for extreme weather events. That is not nearly enough to cover these storms, but it’s a start. If city hall cannot find the additional money for storm repairs by scaling back spending on other things, it can always raise property taxes or borrow the money – neither desirable, but not inconceivable. And passing on the costs only means higher levels of government could face doing the same.
The report from city staff says Toronto simply cannot afford the storm costs. Council, it notes, has ordered that the city’s annual budget surpluses (2013’s is forecast at $92-million) be used to pay for capital projects and cover unfunded liabilities. That is wise policy, but not proof of inability to pay. Imagine a homeowner who finds a hole in his roof and argues he can’t fix it because he has a plan to put all his extra money toward paying down the mortgage.
City manager Joe Pennachetti says he worries as much about the cost of future storms as the cost of this one. “If we keep getting storms like this every year, and it’s another $100-million a year, I think you would agree that, no, the city can’t absorb that,” he says.
Perhaps not, but these storms were extraordinary events and no one can say for certain what the future will bring. In the meantime, a wealthy city such as Toronto should be able to summon the resources to repair its storm damage without calling on the strained means of other governments and the taxpayers who support them.