Tory's 1st Budget: An IOU

[Anbarandy]

Tory wants city to lend to itself to balance books


Ann Hui The Globe and Mail

Last updated Thursday, Feb. 12 2015, 9:26 PM EST



Mayor John Tory is proposing the City of Toronto take the unusual step of borrowing money from its own capital reserves to balance the books.

Faced with provincial funding cuts and constrained by promises to improve services while holding property tax increases at the rate of inflation, Mr. Tory has spent the past several weeks looking for ways to fill an $86-million hole in his proposed 2015 operating budget. On Thursday, Mr. Tory said that he and city staff have landed on a solution: through “internal borrowing” – having the city lend itself the funds out of its capital reserves.

“This represents a thoughtful, responsible solution to the budget,” Mr. Tory said. “We’ve found a creative way, which is what happens when you bring fresh eyes to a place like this – totally legal and totally proper and totally prudent – to allow us to spread out what you’ve just heard were the biggest cutbacks this city government has faced in 20 years or more.”

The strategy, which needs to be approved by the budget committee and city council, would see Toronto borrowing $130-million over the next three years to ease the blow of the province’s withdrawal last year of a $129-million fund. The loan would have to be paid back with interest, at market rate, and would hold the city to a strict plan of finding a total of $160-million in savings or additional revenue over the next four years.

Despite staff acknowledging that the strategy has never been used in Toronto since amalgamation, city manager Joe Pennachetti said the move is responsible. “This is the best way to balance the pressure we have to maintain services, and at the same time maintain appropriate tax levels. I believe this is the most prudent way of dealing with this.”

As part the announcement, Mr. Tory said that in the past few weeks, city staff have found $25-million in potential savings to help fill the 2015 budget hole. The savings would come in part by reducing the proposed budgets of the Toronto Police Service and the Toronto Transit Commission by $5-million each. Savings also come from additional revenue from parking enforcement and cheaper gasoline prices.

Mr. Tory first announced details of his original 2015 budget proposal in January. As part of that plan, he promised $95-million in improvements to the TTC, as well as increased spending on shelter beds and road repairs.

But the proposal included an $86-million hole that the city was relying on the province to fill. After the province made clear it would offer only a one-time line of credit at the market rate, the city declined that offer.

Since then, Mr. Tory and city staff have considered a number of options for plugging that hole, including a bank loan. And while Mr. Tory said Thursday that there is “no risk whatsoever” to the latest strategy, at least one of his council colleagues disagreed.

“This is a really high-risk approach,” Councillor Gord Perks said. “They’re borrowing from our ability to fix roads, buy buses, repair housing – all of those things we’re going to need to do in the future.”

He said the approach does not provide a permanent solution to the provincial funding withdrawal, and that the city should raise property taxes beyond the 2.75 per cent Mr. Tory promised.

“Mostly what we were told today is the problem is being put off until tomorrow,” said Mr. Perks. “It’s an enormous gamble.”



Well there you have it folks, instead of balancing the budget whereby influent equals effluent, the master of illusion John Tory has just issued a personal IOU to The City of Toronto to be paid by future taxpayers at some point, in some form, somehow.

In order to keep his ludicrous campaign promise of 'taxes at or near the rate of inflation' to fund increased and improved services, he has decided to raid the capital expenditures account to pay for his operating expenses promises.

The leaky roof, those rusty pipes, that old furnace and that flood prone basement will just have to wait to be addressed because gosh darn, he promised us cable TV, a new couch and a granite counter top too,

His 'smoke and mirrors' campaign pledges are beginning to clear and we are getting a quite unflattering reflection.

Hey Mr. Tory, why not 'cut the BS' and:

1) Increase revenue and taxes to meet the funding of your campaign promises.

2) Cancel the BDL Gravy Train extension and employ the projected +$2billion savings to fund increased and improved services.

3) 'Grow a pair' and tell Torontonians that 'taxes will have to be increased far beyond the rate of inflation to fund my campaign promises to you'.

 

[Butler1000]

You forgot to privatize garbage and see about other privatization that will bring in savings to cover the costs of the continuing down loading by the province.

Oh and since when is the TTC a "Granite countertop". And homeless shelters?

It works out to be about 30 million per year over four years if they have to continue it without added revenue from elsewhere. Privatize the garbage will save 20+ million alone.

They have a year tops left and then they are gone.

Not a bad first budget. Certainly not perfect. But they never are.

 

[Anbarandy]

A $5-a-month increase in the average homeowner's property tax would do away with the $86-million hole, but politicians prefer to count on a fairytale rescue years away.

By: Edward Keenan Columnist, Published on Thu Feb 12 2015 Toronto Star

Yesterday Mayor John Tory and budget chief Gary Crawford unveiled their strategy to solve the problem of a $86 million hole that appeared in their budget when they rejected the province’s backhanded offer of an expensive loan.

They are cutting expenses with a few tweaks that they say will not affect services. That’s straightforward enough.

For the other $60 million, they are borrowing from the capital budget, where they are legally allowed to run a deficit. The specific plan involves a lot of ledger work, but it amounts to paying $60 million fewer of our capital costs in cash for each of the next two years and borrowing to make up the difference. Then, in future years, we have to pay all that back from operating funds.

Essentially, it’s like skipping a mortgage payment or two so you don’t have to cut the grocery budget, on the promise you’ll double up those mortgage payments later.

It’s not a complete disaster, but it’s not ideal, either, and it doesn’t solve any problems, it just punts them into the future. The $60-million hole in the budget we paper over with borrowed funds this year will be back again next year, except then we’ll also face paying back the bridge financing and interest on top of it.

At some point, sooner or later — barring some radical unforeseen shift in the city’s revenue and expense position (either a deus ex provinciae or a visit from the efficiency fairy) — we’ll need to either cut services or raise taxes to get rid of this hole. The further off we push that decision, the harder the task becomes.

The frustrating thing about this, if you were evaluating it in a vacuum, is that the permanent solution is not all that painful.

The current proposed property tax increase will cost the average homeowner an additional $5 a month. If you doubled that, you would eliminate this hole in the budget permanently, with no need to borrow. It would mean another $5 a month, which is not nothing, obviously. But it’s not a back-breaking amount for the vast majority of people, either — a couple of coffees, fewer than a couple of TTC tokens. It’s worth noting that would still leave Toronto homeowners with an average tax bill about $500 a year below the GTA average, and more than $1,000 a year cheaper than the one our average neighbour in Vaughan faces.

The reason we don’t even contemplate this, of course, is clear to anyone who watched the election: John Tory (and his opponents) all promised lower-than-inflation property tax increases. Raising the property tax rate has become the unquestionable taboo in Toronto politics — garbage fees, TTC fares, recreation fees can all be hiked, and now we see that all sorts of debt-incurring contortions can be engaged, but the sacred property tax rate needs to be left alone.

At the same time, the other alternative, cutting services, seems to be equally intolerable to the people and politicians in Toronto. Rob Ford threatened a big game, but was seriously politically wounded by the service cuts he did oversee. His successor and current city councillors show no appetite for the heavy axe work required to balance the budget on the spending side.

The problem is, that doesn’t leave a lot of viable options. The wished-for alternatives are fantasies.

As Rob Ford found under the tutelage of the same city manager John Tory has chosen to keep by his side for this budget round, massive efficiency savings just aren’t available. This whole crisis was caused by a provincial decision to stop funding social housing in Toronto, and a further decision not to provide temporary help this year. The idea they’ll suddenly reverse course to rain dollars on a city that’s too afraid to raise taxes that are more than 30 per cent lower than the regional average is a pipe dream.

The thing is, the decision to cut services or raise taxes doesn’t disappear with this borrowing game, it just gets harder. As anyone who has seen an ad for financial planning can tell you, a dollar invested in a retirement savings plan today is worth several invested a decade from now, thanks to the miracle of compounding.

That miracle is reversed — a disaster — when it comes to putting off property tax increases. A refusal to raise them an extra $5 a month now creates a need for more than $10 a month next year, which becomes a jump of $20 or more a month down the road. (That’s the reason, as Metro columnist Matt Elliott was pointing out Thursday, that if the city had not kept property taxes flat in 2011, this budget hole would not exist.)

It looks like Tory and Crawford are buying time with this strategy, and it will work to do that, at a cost that is not absurd. It’s certainly preferable to slashing services or delaying other much-needed expenditures. But it’s unclear what they are buying it for — it certainly looks like it’s just the time to steel themselves (and us) for a far more difficult decision on taxes and services in a few years.


A Tory fairytale budget.

 

[Anbarandy]

You forgot to privatize garbage and see about other privatization that will bring in savings to cover the costs of the continuing down loading by the province.

Oh and since when is the TTC a "Granite countertop". And homeless shelters?

It works out to be about 30 million per year over four years if they have to continue it without added revenue from elsewhere. Privatize the garbage will save 20+ million alone.

They have a year tops left and then they are gone.

Not a bad first budget. Certainly not perfect. But they never are.

"Efficiencies and other levels of government', I suppose.

You'd rather subsist on fairytales rather than face cold hard truth.

You ain't going to privatize your way out of your fantasies.

By the by, t'weren't it you who railed against the cost of improved and increased TTC services whilst simultaneously and vehemently exclaiming 'not one bloody, red cent' should go to increased and improved social services?

The sudden about face is astounding.

 

[boodog]

Tory wants city to lend to itself to balance books


Ann Hui The Globe and Mail

Last updated Thursday, Feb. 12 2015, 9:26 PM EST



Mayor John Tory is proposing the City of Toronto take the unusual step of borrowing money from its own capital reserves to balance the books.

Faced with provincial funding cuts and constrained by promises to improve services while holding property tax increases at the rate of inflation, Mr. Tory has spent the past several weeks looking for ways to fill an $86-million hole in his proposed 2015 operating budget. On Thursday, Mr. Tory said that he and city staff have landed on a solution: through “internal borrowing” – having the city lend itself the funds out of its capital reserves.

“This represents a thoughtful, responsible solution to the budget,” Mr. Tory said. “We’ve found a creative way, which is what happens when you bring fresh eyes to a place like this – totally legal and totally proper and totally prudent – to allow us to spread out what you’ve just heard were the biggest cutbacks this city government has faced in 20 years or more.”

The strategy, which needs to be approved by the budget committee and city council, would see Toronto borrowing $130-million over the next three years to ease the blow of the province’s withdrawal last year of a $129-million fund. The loan would have to be paid back with interest, at market rate, and would hold the city to a strict plan of finding a total of $160-million in savings or additional revenue over the next four years.

Despite staff acknowledging that the strategy has never been used in Toronto since amalgamation, city manager Joe Pennachetti said the move is responsible. “This is the best way to balance the pressure we have to maintain services, and at the same time maintain appropriate tax levels. I believe this is the most prudent way of dealing with this.”

As part the announcement, Mr. Tory said that in the past few weeks, city staff have found $25-million in potential savings to help fill the 2015 budget hole. The savings would come in part by reducing the proposed budgets of the Toronto Police Service and the Toronto Transit Commission by $5-million each. Savings also come from additional revenue from parking enforcement and cheaper gasoline prices.

Mr. Tory first announced details of his original 2015 budget proposal in January. As part of that plan, he promised $95-million in improvements to the TTC, as well as increased spending on shelter beds and road repairs.

But the proposal included an $86-million hole that the city was relying on the province to fill. After the province made clear it would offer only a one-time line of credit at the market rate, the city declined that offer.

Since then, Mr. Tory and city staff have considered a number of options for plugging that hole, including a bank loan. And while Mr. Tory said Thursday that there is “no risk whatsoever” to the latest strategy, at least one of his council colleagues disagreed.

“This is a really high-risk approach,” Councillor Gord Perks said. “They’re borrowing from our ability to fix roads, buy buses, repair housing – all of those things we’re going to need to do in the future.”

He said the approach does not provide a permanent solution to the provincial funding withdrawal, and that the city should raise property taxes beyond the 2.75 per cent Mr. Tory promised.

“Mostly what we were told today is the problem is being put off until tomorrow,” said Mr. Perks. “It’s an enormous gamble.”



Well there you have it folks, instead of balancing the budget whereby influent equals effluent, the master of illusion John Tory has just issued a personal IOU to The City of Toronto to be paid by future taxpayers at some point, in some form, somehow.

In order to keep his ludicrous campaign promise of 'taxes at or near the rate of inflation' to fund increased and improved services, he has decided to raid the capital expenditures account to pay for his operating expenses promises.

The leaky roof, those rusty pipes, that old furnace and that flood prone basement will just have to wait to be addressed because gosh darn, he promised us cable TV, a new couch and a granite counter top too,

His 'smoke and mirrors' campaign pledges are beginning to clear and we are getting a quite unflattering reflection.

Hey Mr. Tory, why not 'cut the BS' and:

1) Increase revenue and taxes to meet the funding of your campaign promises.

2) Cancel the BDL Gravy Train extension and employ the projected +$2billion savings to fund increased and improved services.

3) 'Grow a pair' and tell Torontonians that 'taxes will have to be increased far beyond the rate of inflation to fund my campaign promises to you'.

He just did to-day.

3 weeks late but he just did admit by issuing IOU on taxpayers of future years.

And still lying on "budget balanced" and/or on tax increase at or below rate of inflation.

Lying on "balanced budget" and increase tax at the rate of inflation while imposting garbage collection fee and raising user fees up to 12%.

 

[boodog]

A $5-a-month increase in the average homeowner's property tax would do away with the $86-million hole, but politicians prefer to count on a fairytale rescue years away.

By: Edward Keenan Columnist, Published on Thu Feb 12 2015 Toronto Star

Yesterday Mayor John Tory and budget chief Gary Crawford unveiled their strategy to solve the problem of a $86 million hole that appeared in their budget when they rejected the province’s backhanded offer of an expensive loan.

They are cutting expenses with a few tweaks that they say will not affect services. That’s straightforward enough.

For the other $60 million, they are borrowing from the capital budget, where they are legally allowed to run a deficit. The specific plan involves a lot of ledger work, but it amounts to paying $60 million fewer of our capital costs in cash for each of the next two years and borrowing to make up the difference. Then, in future years, we have to pay all that back from operating funds.

Essentially, it’s like skipping a mortgage payment or two so you don’t have to cut the grocery budget, on the promise you’ll double up those mortgage payments later.

It’s not a complete disaster, but it’s not ideal, either, and it doesn’t solve any problems, it just punts them into the future. The $60-million hole in the budget we paper over with borrowed funds this year will be back again next year, except then we’ll also face paying back the bridge financing and interest on top of it.

At some point, sooner or later — barring some radical unforeseen shift in the city’s revenue and expense position (either a deus ex provinciae or a visit from the efficiency fairy) — we’ll need to either cut services or raise taxes to get rid of this hole. The further off we push that decision, the harder the task becomes.

The frustrating thing about this, if you were evaluating it in a vacuum, is that the permanent solution is not all that painful.

The current proposed property tax increase will cost the average homeowner an additional $5 a month. If you doubled that, you would eliminate this hole in the budget permanently, with no need to borrow. It would mean another $5 a month, which is not nothing, obviously. But it’s not a back-breaking amount for the vast majority of people, either — a couple of coffees, fewer than a couple of TTC tokens. It’s worth noting that would still leave Toronto homeowners with an average tax bill about $500 a year below the GTA average, and more than $1,000 a year cheaper than the one our average neighbour in Vaughan faces.

The reason we don’t even contemplate this, of course, is clear to anyone who watched the election: John Tory (and his opponents) all promised lower-than-inflation property tax increases. Raising the property tax rate has become the unquestionable taboo in Toronto politics — garbage fees, TTC fares, recreation fees can all be hiked, and now we see that all sorts of debt-incurring contortions can be engaged, but the sacred property tax rate needs to be left alone.

At the same time, the other alternative, cutting services, seems to be equally intolerable to the people and politicians in Toronto. Rob Ford threatened a big game, but was seriously politically wounded by the service cuts he did oversee. His successor and current city councillors show no appetite for the heavy axe work required to balance the budget on the spending side.

The problem is, that doesn’t leave a lot of viable options. The wished-for alternatives are fantasies.

As Rob Ford found under the tutelage of the same city manager John Tory has chosen to keep by his side for this budget round, massive efficiency savings just aren’t available. This whole crisis was caused by a provincial decision to stop funding social housing in Toronto, and a further decision not to provide temporary help this year. The idea they’ll suddenly reverse course to rain dollars on a city that’s too afraid to raise taxes that are more than 30 per cent lower than the regional average is a pipe dream.

The thing is, the decision to cut services or raise taxes doesn’t disappear with this borrowing game, it just gets harder. As anyone who has seen an ad for financial planning can tell you, a dollar invested in a retirement savings plan today is worth several invested a decade from now, thanks to the miracle of compounding.

That miracle is reversed — a disaster — when it comes to putting off property tax increases. A refusal to raise them an extra $5 a month now creates a need for more than $10 a month next year, which becomes a jump of $20 or more a month down the road. (That’s the reason, as Metro columnist Matt Elliott was pointing out Thursday, that if the city had not kept property taxes flat in 2011, this budget hole would not exist.)

It looks like Tory and Crawford are buying time with this strategy, and it will work to do that, at a cost that is not absurd. It’s certainly preferable to slashing services or delaying other much-needed expenditures. But it’s unclear what they are buying it for — it certainly looks like it’s just the time to steel themselves (and us) for a far more difficult decision on taxes and services in a few years.


A Tory fairytale budget.

"What is the story Mr Tory?"

 

[fuji]

"What is the story Mr Tory?"

The story is he trounced Doug Ford in the last election. People are sick of the incompetent, lying Ford thugs and decided to replace them with a competent, experienced manager.