TORONTO BUDGET 2012

"MOVING TOWARDS FINANCIAL SUSTAINABILITY"

Yesterday, City Council approved this year's operating and capital budgets with a final vote of 39-5.  

• It is the first time that a City budget has been adopted at the start of the year as opposed to March or April as has been the case in the past.  This timing allows City staff to begin work on Capital projects much earlier in the year. 
• This timeline was achieved without curtailing valuable public consultation or debate; it is about us working smarter - together.
• This budget also represents the first time, since amalgamation, that overall spending on the Operating Budget has been actually reduced.
• The Budget & Executive Committees recommended an overall reduction of $50 million in spending.  In the end, Council approved a reduction of $30 million in the net budget.
• This budget also looked at the revenue side of the equation. For the first time ever we passed a comprehensive user fee policy and reviewed every single fee and charge (a few went down, some were eliminated, many were subjected to simply inflationary increase, and many more were significantly revised to better reflect cost recovery).
• For the first time ever development application fees will fully recover the entire cost of delivering that service to developers and builders. 
• The new user fee policy will now deliver more than $6m in additional revenues to the City.

This Budget clearly represents a culture change at City Hall. 

• Increases in spending have been contained
• Increases in staffing are being reversed
• Reliance on reserve draws and increasing debt is being reduced

2011 SURPLUS:

You will have heard much talk about the City's surplus. Our surplus is not like a bottom line 'profit' or a windfall, it is merely a positive cashflow. The City continues to have billions in unfunded liabilities and capital projects.

The recommendation that was before Council for their consideration, was that the 2011 cash flow surplus of $154 million, be entirely directed towards paying for TTC capital costs (primarily for new subway cars, streetcars, and buses - all of which were ordered in the previous term of Council).  This would have reduced the increase in our debt by the equivalent amount.

On a motion tabled by Councillor Colle at Council, there was a recommendation to redirect $15m of the $154m to reinstate certain spending cuts and efficiencies, thus adding to debt by that amount, and increasing the associated borrowing costs.

This motion, which grouped a number of recommendations together as one package, passed with a 23-21 vote. 

**This still leaves in excess of $2 billion of unfunded TTC Capital needs which have to be addressed in future years** 

PROPERTY TAX INCREASE:

Council voted to support a property taxes increase of 2.5% for residential, and 0.83% for non-residential properties.  This non-residential increase is in accordance with Council's policy to bring their tax rates in line with the average rates in the 905 region.

We are committed to making Toronto more attractive for investment in office, commercial, and industrial development. Unfortunately, our non-residential rates are still significantly higher than our neighbours. We hope to effectively close this gap by approximately 2017.

COUNCILLOR MILCZYN COMMENTS:

The 2012 Budget process was remarkable for the passion it unleashed in so many Toronto residents.  I received thousands of emails during the process. Residents expressed to me that they value the services the City provides, and that they wanted to ensure that those services are maintained.  But the other message sent to my office was that value for money is very important and that tax dollars should be both wisely and fairly allocated. 

Unfortunately this passion was clouded by some fear mongering and misinformation. There were many myths circulated stating services would be cut or closed (such as museums and Montgomerys Inn); but these were never being recommended to Council.

Council's decision to add back approximately $20 million in expenditures has a modest impact on the City's finances, but an even lesser impact on services the vast majority of residents use.  Some of the additional add-ins that were introduced at City Council, In my opinion, were not really necessary and doesn't address future years.  It is a one time, one year fix.

I did not support this motion for various reasons explained below.

ARENAS

Council also chose to spend close to $700,000 to keep all City arenas open during weekday daytime hours whether they are being used or not.  In fact, those arenas considered for daytime closure are only being used during 3.5% of all available hours. This allocation of your tax dollars does not represent providing service to residents.

DAYCARES

Council added back in $1.7 million for little known secret subsidies for full-fee paying parents in school based daycare centres. This is a subsidy that all other full-fee paying parents across the City do not receive.  I feel that this does not represent compassion. Compassion would have directed those funds to providing subsidised daycare spaces to those in need.  Instead it represents maintaining old deals negotiated with school boards to subsidise their overheads. 

Council voted to reinstate three daycare centres for a cost of nearly $1.6m that serve just 44 children, when there is capacity in those same neighbourhoods to serve those families. Even though the facility maintenance, utility, and other costs are exorbitant.

TTC

Council also voted to add back $5 million from surpluses and put towards TTC service. While I agree that added funding for the TTC is greatly needed, Councillors were repeatedly advised that the real issue is a need for $95 million to expand the bus fleet.  Money to hire drivers for buses that do not exist will not provide service. 

The proposed budget already included money to hire additional TTC drivers to maximise the use of all the buses we already have in our fleet. 

LIBRARIES & LOCAL ARTS ORGANIZATIONS

The Executive Committee also had already directed that additional funds be put towards the Library budget, Arts & Culture grants, and to community recreation centres.  I personally moved that the funds to be directed to the local arts groups (such as Arts Etobicoke) were to not come from surpluses, but rather from the departmental budgets and cost savings.

In closing, no budget will be perfect; there are always choices to be made and priorities to be set.  There will always be differences of opinion as to how your money should be spent.  I do feel that this 2012 Budget, overall, is a smarter and more sustainable one than the City has seen in years. 

There is still much work for us to do.  City Council must work together. We must continue to seek public input. We have to fix the state of our City finances and must hold the line on debt.  As your Councillor, I commit to these priorities while making sure that your tax dollars are wisely spent and that Council makes decisions which provide you the best services possible that are within the financial means of our City.

The process to build the 2013 budget will begin soon, and if we maintain the current course we will have a sustainable budget that does not rely on one time monies or reserve draws, within two years. That will be truly a remarkable achievement.

ADDITIONAL INFORMATION & RESOURCES:

For more information on the 2012 Budget and budget process, please take the time to go to the City website at this link  

To review the Press Release from the City dated January 17, 2012, please go to this weblink 

For review the 2012 Operating Budget Analyst Notes, please go to this weblink   

I hope that this update has been helpful. I remain very optimistic that City Council will continue to work together, to listen to residents, to reduce spending, and to ensure that your municipal government makes both smart and responsible decisions on your behalf.

If you have additional or specific questions, please email them to me.