Hey, folks, he did it! Just as he promised, Mayor Rob Ford has produced a budget that freezes property taxes without resorting to any major cuts to city services.
But before we break into hallelujahs, let's consider how he accomplished this remarkable feat. Mr. Ford was able to deliver on his tax freeze only because the city got a windfall last year. Economic conditions were better than officials had expected, leaving the city with a big budget surplus.
A more prudent man might have put the money aside for a rainy day. Instead, Mr. Ford will use it to finance his promised gift to taxpayers. That may make Mr. Ford a popular guy, but a triumph of fiscal skill it is not.
Of the $706-million that the city has found to balance its 2011 budget, just $57-million comes from the kind of waste-cutting and "efficiencies" that Mr. Ford talked so much about in his successful campaign for mayor. Of the rest, $350-million comes from that bigger-than-expected 2010 surplus; $63-million from the Ontario government, which agreed to share more of the city's welfare costs; and about $250-million from higher tax and user-fee revenues.
Even with those gifts from the gods, city staff are recommending a 10-cent transit-fare increase. The hike is necessary to help pay for Mr. Ford's decision to freeze property taxes for a year and kill the car-registration tax. In effect, transit riders are paying to give car owners a break. The cost of a Metropass would go up $60 a year if the fare-increase went through - by telling coincidence, exactly the amount that motorists used to pay to register their cars.
Of course, Mr. Ford says he has only begun to fight. He hinted darkly that he would fire any manager who defied him over his war on waste. And although this year's savings are mostly piddling, he will bring in outside consultants to find bigger cuts in what he calls Respect for Taxpayers, Part Two: next year's budget. But how difficult that is going to be is starting to become clear.
Just to achieve this year's modest goals, he has been forced to break a central election promise: no service cuts. Cutting service on underused bus routes may be a reasonable thing to do in the circumstances, but when you cut bus service you can't pretend it's not a service cut. Mr. Ford said during his campaign he "guaranteed" there would be no such cuts. Only later did he switch to saying he would avoid major service cuts, and as recently as last month, under questioning at a city committee, he said there would be no cuts at all.
Remember that Mr. Ford also promised to pay off $1.5-billion of the city's debt by 2014. There is no hint of any big move to reduce debt in this budget, not with all those tax breaks to pay for. He promised to devote $416-million to rebuilding the city's reserves for emergencies. Instead, the city is drawing down its depleted reserves once again.
The $350-million bonanza he is enjoying is a one-off. Aunt Gertrude may remember you in her will, but she dies only once. He will have to find the equivalent of that $350-million to balance next year's budget.
He said he would save more than $1-billion through the process of attrition, replacing only half of the employees who leave the city's employment every year. But that was based on his assumption that about 6 per cent of city employees leave every year to retire, go to other jobs and so on. It turns out that only about 3 per cent a year leave, so, unless he decides that none of the staff who leave will be replaced - a move that would cripple many departments - he is out of luck.
Mr. Ford makes budget cutting sound easy. "It's not complicated - we need to simply stop spending more than we take in," he said in October. This soft-soap budget is supposed to confirm it can be done without causing anyone pain. See, says Dr. Ford, that didn't hurt a bit. But the real treatment is still to come.Report Typo/Error