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City Council Adopts 2007 Operating Budget |
At a special meeting, Council approved the City’s $7.8
billion 2007 Operating Budget. On the positive side, it
maintains important municipal services, including
police, fire, emergency services, libraries, roads,
transit, waste collection, recycling, and parks and
recreation; as well as a number of provincially-mandated
social service programs. More problematically, to
balance this year’s Operating Budget, Council raided
$278 million from the City’s reserve funds prior to
approving a property tax increase of 3.8% for residents
and 1.26% for commercial and industrial properties.
I was one of 15 Councillors that did not support the
budget.
It goes without saying that the 2007 budget had
exceptional challenges - one of the most significant
being a $71 million shortfall in funding for
provincially mandated social service programs which the
City is obliged to deliver. That being said, the
strategy to once again hike property taxes above the
rate of inflation; raid reserve funds and hope for a
future provincial or federal cash bail-out is, in my
opinion, unsound. As identified by our Chief Financial
Officer, there is a financial crisis looming at the City
and, in my view, we are overdue for corrective action.
Council’s leadership is also considering new “revenue
tools” provided by the new City Toronto Act. They are
particularly attracted to the possibility of new land
transfer fees, new vehicle ownership fees and special
taxes on liquor and entertainment. However, the
potential revenue that could be realized by adopting all
such measures would likely still be short of the amount
required to close the annual budget deficit.
Furthermore, there are concerns that implementing these
measures would encourage tax avoidance and put Toronto
at a competitive disadvantage with neighbouring
municipalities. (Incidentally, City staff are currently
conducting public information sessions on the possible
new taxes – the North York session will be at 7:00 p.m.
on Thursday, May 17 at Memorial Hall, 5100 Yonge
Street.)
My prescription: On the revenue side, Council must
significantly increase residential development charges
for new construction. Consider this - infrastructure in
Toronto is required at a rate of about $23,000 for every
new resident introduced through residential growth.
Developers, however, remit to the City only about $4,000
per person in development charges. And since the city
has been growing at 10,000 to 15,000 people per year,
this has resulted in a shortfall of about $200 million
per year - for many, many years. Council’s leadership
continues to ask for a bail-out from federal and/or
provincial taxpayers while failing to take on this
home-grown solution.
On the spending side, there are a number of actions
Council could undertake to reduce expenditures and
provide more efficient delivery of city services. These
include:
(1) Review the City’s Fair Wage Policy (paid by the
City’s contractors) and bring rates into line with those
of the Federal and Provincial Governments.
(2) Limit wage increases for City staff and Councillors
- to the rate of inflation.
(3) Deliver city services more efficiently – certain
services which can be provided more efficiently by the
private sector should be contracted out.
(4) Implement methodologies well tested in the private
sector – such as business re-engineering and zero-based
budgeting.
I would be pleased to receive your feedback on the 2007
Operating Budget and the state of the City’s finances in
general. If you have questions or comments, please
contact my office at 416-395-6408
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