Spending like there’s no tomorrow
By SUE-ANN LEVY
During the dying hours of the last council meeting for this term, the politicians who purport to manage this debt-ridden city approved more than $1-billion in new expenditures.
There was the controversial $710-million purchase of 234 new subway cars from Bombardier — a deal that was never put out for competitive tender. There was the allocation of the capital needed for the proposed subway extension to York University. There was the money needed to pay for Toronto’s now failed 2015 Expo bid. And much, much more.
Most of the above is to be financed by raising more debt, or through funding from the senior levels of government or heaven knows what else. Under the regime of Mayor David Miller the exact funding options are forever “fluid.”
That council meeting was mere days after the mayor and his minions voted in secret to buy the city a landfill site near St. Thomas where officials can throw the 60% of Toronto’s trash not yet diverted through the blue box or green bin programs. The cost is estimated anywhere from $220-million to $500-million. No one will know for sure until mid-December when the deal is expected to close.
City officials sure aren’t sharing how they’ll pay for the landfill either. Two months ago — when the deal was announced — solid waste general manager Richard Butts said the landfill will “pay for itself” but refused to elaborate.
But rest assured folks, the Millerites have everything under control. They’ve simply taken their lead from Leon’s and the Brick furniture stores — they prefer to “buy now” and “pay later.” In other words, if they don’t get the money they need for their pet projects, they simply borrow more.
And yes indeed Miller and his socialist seals have been good consumers over the past three years, driving up city spending by a whopping $1.3-billion and the city debt by $700-million.
No expense has been spared on pet projects like the St. Clair dedicated streetcar line — now budgeted at $95-million and counting. Or on investments in fuzzy-wuzzy programs aimed at making residents feel better in the 13 Toronto neighbourhoods hit by crime — which have topped $46-million this year.
Some 10.5% of every tax dollar taken in now goes towards servicing the debt. Deputy city manager and CFO Joe Pennachetti figures that will hit 15% within five years, when he hopes to see that percentage “level off.”
Still it’s not as if the senior levels of government have failed to respond to the city’s constant cries for bailouts.
Pennachetti says for next year, the city will get $162-million from the province in the way of gas tax money — $92-million will be used for TTC operating expenses and $70-million for capital.They expect to get another $140-million for transit from the feds.
That’s just the situation on the capital side. The operating budget is another sad story. Early predictions suggest the budget itself will grow to $8.1-billion next year and the opening deficit will be a whopping $519-million, similar to what it was last year.
Pennachetti says some $250-million of that relates to inflation, the lucrative wage hikes awarded to the city’s unionized employees (my words) and costs to service the debt.
Another $160-million in one-time funds were drawn from the city’s ever-depleting reserves to balance the books last year — money which must be found this year.
He warns that unless the province gives the city sustainable funding, they will continue to have to find $300-million or raid their rainy day funds, many of which are near bone dry. In fact, he says if they do take money from reserves next year, it will be from accounts that are considered “obligatory” — that is, ones that would be used for capital purposes instead of increasing the debt.
Miller’s solution — other than raising property taxes yet again — is to seek a one-cent share of the PST (which he figures will give the city an extra $450-million). But His Blondness could be waiting a long time. Pennachetti says the province has not been receptive to that idea, although they have indicated they might look at taking back a portion of the $700-million in social housing and Ontario Works programs the city subsidizes each year.
(For the record, he says the new City of Toronto Act will not yield much in the way of new revenues — about $10-million — and not until 2008.)
Still it’s awfully hard to feel sorry for city officials or the mayor and his minions when they cry poor.
There’s been an ongoing resistence to engage in zero-based budgeting. The lone deputy city manager, Fareed Amin, who indicated he’d do so left the city (probably in disgust) a few months ago.
When he took any threat of contracting out off the table early in his term Miller effectively sent his union pals a message that their jobs are for life, no matter how inefficient they are. (There are still threats that the socialists will consider handing two privatized garbage contracts in the old cities of York and Etobicoke back to the unions once the election dust settles — at a extra cost of more than $22-million.)
In exchange the unions were to engage in continuous improvement of their services — a program which has proven to be a joke.
City manager Shirley Hoy says the focus of their continuous improvement energies right now is reducing workplace injuries down to zero.
Asked whether they have any idea how much money they’re saving by concentrating on this area, she said they “did not set financial targets.”
Outgoing budget chief David Soknacki says he’s never seen any figures on continuous improvement savings to date.
While he feels concentrating on health and safety is an mportant part of improving every workplace, it shouldn’t be the “only focus” of the continuous improvement program.
He thinks cold, hard realities — like the pressures on the city’s credit rating and the inability of residents to absorb more tax increases if services don’t improve — will keep the socialist spendaholics in check.
Penny-pinching councillor Doug Holyday thinks otherwise.
He feels the Miller regime could potentially take the city in the same direction —leaving it with a huge debt — as NDP Premier Bob Rae did with the province in the 1990s.
“There’s been no tightening up of the purse strings, no attempt to review services to provide them in a more efficient manner,” he said, adding getting money from the PST would only increase this council’s lack of accountability.
Coun. Mike Del Grande: “Accountability isn’t a word that means anything at City Hall ... I’ve always predicted we’re going to end up like New York City and have to declare bankruptcy ... we’re definitely headed in that direction.”
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