THE CITY: Toronto's 2018 budget is balanced, until you think about it

Opinion Nov 30, 2017 by David Nickle Beach Mirror

Toronto's city manager Peter Wallace was pleased Thursday morning, and he had every right to be: he and his staff had just delivered a balanced city budget to Toronto councillors: $10.972 billion in spending, matched more or less with revenue that includes a big dollop of extra land transfer tax and a modest 2.1 per cent property tax increase on homeowners. 

In this, city staff have, he noted proudly at the Nov. 30 budget launch, delivered exactly what Toronto council asked for in May. 

But councillors ought not pop the champagne corks just yet. Over the third year of the four year term, council has or will soon approve some $41.2 million in new and enhanced services and the mayor has backed most of them: a strategy to combat anti-Black racism; an aboriginal affairs office; a two-hour transfer on the TTC; poverty reduction. Littler things, like the RH Armstrong pool in Leslieville that had been shuttered for city swim programs in early 2017 and reopened by council in the summer, will be thrown in the mix to fight over about $9 million in additional “rainy day” funding in the budget. 

As Wallace dryly noted, councillors have continued to add to a wish-list of programs and services that the city might theoretically deliver, without being willing to raise property taxes to pay for them. 

Wallace has talked to councillors about this conundrum before, and that is likely one reason that he has placed the programs approved in-year in an unfunded category. It serves as a stern lesson in pocketbook management, to ask council to at some point consider the cost of its dreams.

On another matter, he has all but thrown up his hands: that being the reliance on the municipal land transfer tax. Since he arrived at city hall, Wallace has been warning councillors that the tax offers a false sense of security. The booming housing market over the past decade has meant that revenue from the tax has continually grown, but that reason suggests growth will not necessarily continue. At some point, maybe very soon, the housing market will correct, and when it does the revenue will plummet.

It hasn't done that this year, however. Staff expect that Toronto will take in $793 million at the end of 2017, an $85 million increase over last year.

Dutifully – maybe resignedly – Wallace has stuffed that money straight into the operating budget, to prop up existing services and also those that were coming online due to prior years' decisions. Something, for instance, is going to have to pay the operating costs on that new subway line stretching from Sheppard West through York University and into Vaughan. For now, the Land Transfer Tax will be a great help.

And if it's not – Wallace was blunt with councillors at the presentation. If revenue collapses, council will have to make some hard decisions very quickly in election-year 2018, to ensure that the city doesn't run a deficit. 

It is a tempting gamble that council seems poised to make. Pre-emptively cutting programs and/or raising property taxes over the rate of inflation while the money is still coming in might be prudent management, but it's an immediate political risk.

It is also a political risk, of course, to hope that the measures taken by the provincial government to cool the housing market won't have any real impact and the land transfer taxes will keep rolling in as before.

If that bet turns sour, it could become a much more serious matter than a Sophie's Choice budget process in which interested residents come in and plead with councillors to spare the programs and services that they might have thought were already being delivered.

Next year could become a year in which we all plead to maintain the basic services that had been afloat on nothing more than the unreliable boon from our overheated real estate market. That would be a mess – electorally certainly, and civically, absolutely.

-David Nickle can be reached at dnickle@insidetoronto.com

THE CITY: Toronto's 2018 budget is balanced, until you think about it

Opinion Nov 30, 2017 by David Nickle Beach Mirror

Toronto's city manager Peter Wallace was pleased Thursday morning, and he had every right to be: he and his staff had just delivered a balanced city budget to Toronto councillors: $10.972 billion in spending, matched more or less with revenue that includes a big dollop of extra land transfer tax and a modest 2.1 per cent property tax increase on homeowners. 

In this, city staff have, he noted proudly at the Nov. 30 budget launch, delivered exactly what Toronto council asked for in May. 

But councillors ought not pop the champagne corks just yet. Over the third year of the four year term, council has or will soon approve some $41.2 million in new and enhanced services and the mayor has backed most of them: a strategy to combat anti-Black racism; an aboriginal affairs office; a two-hour transfer on the TTC; poverty reduction. Littler things, like the RH Armstrong pool in Leslieville that had been shuttered for city swim programs in early 2017 and reopened by council in the summer, will be thrown in the mix to fight over about $9 million in additional “rainy day” funding in the budget. 

As Wallace dryly noted, councillors have continued to add to a wish-list of programs and services that the city might theoretically deliver, without being willing to raise property taxes to pay for them. 

Related Content

Wallace has talked to councillors about this conundrum before, and that is likely one reason that he has placed the programs approved in-year in an unfunded category. It serves as a stern lesson in pocketbook management, to ask council to at some point consider the cost of its dreams.

On another matter, he has all but thrown up his hands: that being the reliance on the municipal land transfer tax. Since he arrived at city hall, Wallace has been warning councillors that the tax offers a false sense of security. The booming housing market over the past decade has meant that revenue from the tax has continually grown, but that reason suggests growth will not necessarily continue. At some point, maybe very soon, the housing market will correct, and when it does the revenue will plummet.

It hasn't done that this year, however. Staff expect that Toronto will take in $793 million at the end of 2017, an $85 million increase over last year.

Dutifully – maybe resignedly – Wallace has stuffed that money straight into the operating budget, to prop up existing services and also those that were coming online due to prior years' decisions. Something, for instance, is going to have to pay the operating costs on that new subway line stretching from Sheppard West through York University and into Vaughan. For now, the Land Transfer Tax will be a great help.

And if it's not – Wallace was blunt with councillors at the presentation. If revenue collapses, council will have to make some hard decisions very quickly in election-year 2018, to ensure that the city doesn't run a deficit. 

It is a tempting gamble that council seems poised to make. Pre-emptively cutting programs and/or raising property taxes over the rate of inflation while the money is still coming in might be prudent management, but it's an immediate political risk.

It is also a political risk, of course, to hope that the measures taken by the provincial government to cool the housing market won't have any real impact and the land transfer taxes will keep rolling in as before.

If that bet turns sour, it could become a much more serious matter than a Sophie's Choice budget process in which interested residents come in and plead with councillors to spare the programs and services that they might have thought were already being delivered.

Next year could become a year in which we all plead to maintain the basic services that had been afloat on nothing more than the unreliable boon from our overheated real estate market. That would be a mess – electorally certainly, and civically, absolutely.

-David Nickle can be reached at dnickle@insidetoronto.com

THE CITY: Toronto's 2018 budget is balanced, until you think about it

Opinion Nov 30, 2017 by David Nickle Beach Mirror

Toronto's city manager Peter Wallace was pleased Thursday morning, and he had every right to be: he and his staff had just delivered a balanced city budget to Toronto councillors: $10.972 billion in spending, matched more or less with revenue that includes a big dollop of extra land transfer tax and a modest 2.1 per cent property tax increase on homeowners. 

In this, city staff have, he noted proudly at the Nov. 30 budget launch, delivered exactly what Toronto council asked for in May. 

But councillors ought not pop the champagne corks just yet. Over the third year of the four year term, council has or will soon approve some $41.2 million in new and enhanced services and the mayor has backed most of them: a strategy to combat anti-Black racism; an aboriginal affairs office; a two-hour transfer on the TTC; poverty reduction. Littler things, like the RH Armstrong pool in Leslieville that had been shuttered for city swim programs in early 2017 and reopened by council in the summer, will be thrown in the mix to fight over about $9 million in additional “rainy day” funding in the budget. 

As Wallace dryly noted, councillors have continued to add to a wish-list of programs and services that the city might theoretically deliver, without being willing to raise property taxes to pay for them. 

Related Content

Wallace has talked to councillors about this conundrum before, and that is likely one reason that he has placed the programs approved in-year in an unfunded category. It serves as a stern lesson in pocketbook management, to ask council to at some point consider the cost of its dreams.

On another matter, he has all but thrown up his hands: that being the reliance on the municipal land transfer tax. Since he arrived at city hall, Wallace has been warning councillors that the tax offers a false sense of security. The booming housing market over the past decade has meant that revenue from the tax has continually grown, but that reason suggests growth will not necessarily continue. At some point, maybe very soon, the housing market will correct, and when it does the revenue will plummet.

It hasn't done that this year, however. Staff expect that Toronto will take in $793 million at the end of 2017, an $85 million increase over last year.

Dutifully – maybe resignedly – Wallace has stuffed that money straight into the operating budget, to prop up existing services and also those that were coming online due to prior years' decisions. Something, for instance, is going to have to pay the operating costs on that new subway line stretching from Sheppard West through York University and into Vaughan. For now, the Land Transfer Tax will be a great help.

And if it's not – Wallace was blunt with councillors at the presentation. If revenue collapses, council will have to make some hard decisions very quickly in election-year 2018, to ensure that the city doesn't run a deficit. 

It is a tempting gamble that council seems poised to make. Pre-emptively cutting programs and/or raising property taxes over the rate of inflation while the money is still coming in might be prudent management, but it's an immediate political risk.

It is also a political risk, of course, to hope that the measures taken by the provincial government to cool the housing market won't have any real impact and the land transfer taxes will keep rolling in as before.

If that bet turns sour, it could become a much more serious matter than a Sophie's Choice budget process in which interested residents come in and plead with councillors to spare the programs and services that they might have thought were already being delivered.

Next year could become a year in which we all plead to maintain the basic services that had been afloat on nothing more than the unreliable boon from our overheated real estate market. That would be a mess – electorally certainly, and civically, absolutely.

-David Nickle can be reached at dnickle@insidetoronto.com