Debunking the myths of Toronto's fiscal woes
Toronto has been in a fiscal hole for so long, many myths have sprouted to explain its budget mess. Here's a closer look – and a reality check – at some of the common "wisdom":
1-Toronto is `fat city' – a municipality drowning in wasteful spending
The truth is that since the 1991 recession, Toronto has been on a cost-containment track. Since June Rowlands was at the inner-city helm and Alan Tonks at the Metro level overseeing the TTC, police and waste, the mantra has been to cut costs and fret over property taxes.
Since 1998, the city workforce has jumped by 7 per cent (3,300 jobs), mostly in the police force, TTC (1,358 due to higher ridership) and mandated provincial programs. Even with a 100,000 population gain, cutbacks are a prominent budget feature.
2-It's all the fault of Mike Harris and the damnable downloading of services
The city's woes actually started before Harris, as Toronto absorbed $278 million in cutbacks from premier Bob Rae and others, filtering down cutbacks from Ottawa.
Then Harris took over and things got worse. The premier's swap of services and costs with the city in 1998 was a devastating event. The upheaval took many years and fiscal contortions to fix. Some of the fixes, like transit funding, are still not permanent and thus a cause for concern at city hall.
Even so, the situation had essentially stabilized by 2002, when Harris handed the top job to Ernie Eves. But in recent years Toronto has been hit by a new set of provincial cost-sharing.
3-Harris has given Toronto nothing but grief
Essentially true. But there are at least two good gifts from the Mike Harris years that no one talks about: Education "tax room" and Toronto Hydro.
As part of the services swap in 1998, the province assumed $565 million in education costs that Toronto used to cover out of property taxes. Instead of having to reduce its tax rate, the city was given the "tax room" to spend the savings on other municipal services. That's still the case today.
The gift of Toronto Hydro has netted enormous benefits. In 1998, Harris restructured the province's electricity business by turning over the distribution arm to municipalities. Suddenly, the $1.6 billion Toronto Hydro became a corporation earning profits for city hall.
In an ingenious paper transaction, the city loaned the utility $1 billion to buy back its assets. The result is Toronto gets to pocket about $100 million a year. Yet no one says, "Thanks, Mike."
4-Torontonians are over-burdened with property taxes
Compared with other Ontario cities, no. Compared with across North America, yes. What irks 905ers is that they pay much higher property taxes than neighbours in the 416 area code. In that sense, Toronto homeowners are not paying as much taxes as they could, leaving the door open for a hike. For Toronto businesses, however, the reality is the direct opposite.
5-Toronto doesn't pay its own way and should stop whining
This is a variation of the same theme. While property taxes are low in Toronto, its residents more than compensate for that by having barrels of the tax dollars they pay federally and provincially sent to other parts of the country.
The net outflow from the city of income tax payments by Torontonians is some $11 billion a year.
6-Toronto's amalgamation is to blame for higher expenditures
The premise about big government costing more than small government may be true, but Toronto is not a good candidate for that argument.
There was big government here already, with almost three-quarters of services amalgamated in Metro Toronto.
Harris's forced marriage was unpopular and poorly executed. The marriage itself didn't make costs skyrocket.
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