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Toronto city manager Joe Pennachetti says for years council has been plundering reserves to cover spending that it does not have the tax revenue to pay for. (Fred Lum/The Globe and Mail/Fred Lum/The Globe and Mail)
Toronto city manager Joe Pennachetti says for years council has been plundering reserves to cover spending that it does not have the tax revenue to pay for. (Fred Lum/The Globe and Mail/Fred Lum/The Globe and Mail)

Marcus Gee

Words to the wise: fiscal sustainability Add to ...

As the city prepares for a two-month battle over Mayor Rob Ford’s 2012 budget, the central question is this: How does the city pay for the things it values?

Ever since the creation of the amalgamated city of Toronto in 1998, budgets have been put together with string, glue and wishful thinking. City council shuffles money from one envelope to another to disguise its annual shortfall. It crosses its fingers and hopes for another bailout from Queen’s Park. It puts off hard decisions on spending for another day.

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If Toronto is to succeed as a city, it must put its finances on a firmer footing. It is not just Mr. Ford and his allies who feel this is so. Listen to city manager Joe Pennachetti, Toronto’s top civil servant.

A grey-haired veteran respected for his integrity and intelligence, he is not given to grandstanding. “You know me,” he told reporters on Monday, “I usually hate quotes.”

But in the midst of a background briefing on Mr. Ford’s new budget, he suddenly announced that he would like to say something on the record. What would happen, reporters were wondering, if city councillors decided to dip a little further into the city’s budget reserves to save some of the programs that are on the chopping block.

That, rejoined Mr. Pennachetti, is precisely what city council has been doing for years: plundering reserves to cover spending that it does not have the tax revenue to pay for. “Once and for all we have to get back to proper financial planning,” he said. “I feel strongly about it. We are at a crossroads.” City councillors, he continued, have “got to make decisions on what services they want to have, and ensure the financing reflects that.”

Mr. Ford came to office with a mandate to restore that balance. Since last year’s election campaign, he has spoken again and again about the need for city hall to act as most of its residents do and live within its means.

He grossly misled voters about how hard it would be, claiming there was no need to lay off workers or cut services. With the presentation of a budget that proposes to reduce the work force by 2,300, trim library spending and cut back on street sweeping, that promise has been revealed for the nonsense it always was.

But he was correct to say that the city’s finances were unsustainable. His budget takes a step toward setting them right.

After carrying out an exhaustive core-services review and demanding a 10-per-cent cut from every department (not all came through), the city has managed to find $355-million in savings. As a result, its gross spending is expected to fall $52-million, to about $9.4-billion. “For the first time ever, folks, we will spend less next year than we did this year,” the mayor boasted. “That is unheard of.”

Just as significantly, the budget projects taking only $83-million from reserves, down from $346-million in the 2011 budget. As Mr. Pennachetti put it, “We are within $83-million of fiscal sustainability.”

As the budget winds its way through the python of democratic process, ending up at city council Jan. 17-19, councillors will be tempted to row back on many of the proposed cuts. Etobicoke councillors, for example, may not like the idea of getting rid of mechanical leaf collection and forcing residents to bag their own leaves.

Downtown councillors, with more justification, may want to fill in a $15-million hole in the Toronto Transit Commission budget. That hole led to the TTC’s unfortunate decision to cut service on 62 bus and streetcar routes.

Mr. Pennachetti had a warning for councillors. Don’t go raiding the reserves for cash again. If you really can’t stomach the cuts, raise taxes or fares instead. In short, make sure we can pay for the services we provide.

You don’t have to be a Ford fan to recognize the sense in that.

Follow on Twitter: @marcusbgee

 

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