Toronto’s 2008 budget: balanced or bailout?

Reading the newspapers (or online equivalents) these days is a frustrating exercise, because the articles tends to generate so many more questions than answers.

Every media outlet is hailing Toronto’s first balanced budget since amalgamation, but is failing to specify certain qualifying criteria.  For example:

When the Toronto City Council unveils its budget Monday morning, many expect it will mark the first time since amalgamation that T.O. will be out of the red, largely thanks to roughly $200 million of the provincial government’s cash.

— CityNews.ca staff, “Toronto’s ‘Balanced’ Budget Means Higher Taxes For Homeowners And Drivers“, January 27th, 2008.

Is that $200 million subsidy from the province an annual or one-time payment?  If it’s annual, then this is indeed worth trumpeting because we have achieved a state of balance.  If it’s a single non-recurring payment, then it’s the same bailout we’ve been getting for the past few years.  The only difference is that this time, the provincial bailout occurred during the city’s budget planning process rather than after it.

How much extra effort would it require for a reporter to ask “are these provincial funding commitments annual, short-term or single-instance?”

The Post does not ask the question.  Neither does the Globe, although it does print a real knee-slapper in the budget highlights:

A continuation of savings and efficiencies in the range of $70-million
to $80-million, following cost-containment measures in 2007 to
stockpile a larger than usual year-end surplus. No loss of front-line
services is expected, with only modest new spending in selected
priority areas, such as parks and economic development.

Toronto does not, as a rule, have budget surpluses.   City council always appeals to the province for additional funding, but usually receives word on that that funding after it has planned, fasted, prayed, rent its hairshirt,  and finally voted on the city budget.  The province has never (thankfully) refused.  If Toronto ever ran a “usual” surplus, it would not be appealing to the province for bailouts in the first place.  Proof from the Star:

Still, this year’s budget process is a big change from past years, when the city opened its budget review period not knowing where it would find $300 million or so needed to cover increases in staff wages and materials, debt repayment costs and service enhancements. Last year’s budget was $7.8 billion.

The city ended up pleading each year for a financial bailout from the provincial government. The bailouts have averaged $150 million a year over the past five years.

Together with raiding reserves, hiking property taxes and trimming costs, the 11th-hour assistance has allowed the city to scrape by each year.

— Paul Moloney, “City property taxes up 3.75%“.  Toronto Star, January 26th, 2008.

Of all places, CBC (!!) comes closest to hinting at the truth.

Miller’s opponents on council are not impressed.

They say the 2008 budget is just as unsustainable as the ones in previous years, with the only difference being that the provincial bailout came early in the process instead of late.

— CBC News, “Balanced budget for Toronto“, January 28th, 2008.

Bingo.  We have a winner!

Why didn’t anyone else decide to do their homework on this story?  Seriously.

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