City Hall Watcher #20: Fact-checking Ford, fiscally
Team Toronto notches a victory over Doug Ford, FAO shows PC government's tax cut plan, the most crowded TTC routes & more
|May 27, 2019||2|
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“Team Toronto” notches a victory as Ford backs off retroactive program cuts
The breaking news siren made all kinds of noise this morning, when the Toronto Star’s Robert Benzie revealed Premier Doug Ford was about to announce the PC government would be backing off plans to make retroactive cuts to municipally-delivered programs like public health, child care and EMS.
Because the provincial government announced their intent after cites and towns had passed their budgets, the cuts had forced municipalities to contemplate things like sending out a second property tax bill. Toronto councillors had talked about labelling it something like the Doug Ford Tax Hike or whatever. The branding needed work.
Talking to reporters alongside Minister of Municipal Affairs and Housing Steve Clark, Ford confirmed his government was backing off but also said “every mayor” had said they could find budget savings but needed more time.
As such, Ford is not backing off the cuts entirely. Cuts are still the plan for next year.
All this leaves us with a bunch of questions.
Why is Ford reversing course now?
It has been 46 days since the Ontario PCs released their budget. Outcry over these cuts started soon after, when municipalities were informed of changes to public health funding.
Why wait almost two months before making this change?
First: the “Team Toronto” PR campaign led primarily by Toronto Mayor John Tory, Councillor Joe Cressy, chair of Toronto’s Board of Health, and a broad bipartisan alliance of councillors that included pretty well everyone not related to the premier, has ramped up significantly over the last few weeks. The mayor even went doorknocking to tell residents about the cuts over the weekend.
Second: there’s data now suggesting the PR campaign is working.
Over the last few weeks, polls from Pollara, Corbett Communications, Environics, Mainstreet and Ipsos have all reported dismal numbers for Ford and his government. Ford’s personal approval is hovering around 20%, while approval for his government is slightly better — but still not good — at 30%.
The Mainstreet and Ipsos polls both show a resurgent Ontario Liberal party — even without a leader — taking around 40% of the vote in the GTA.
Will the cuts be more popular next year?
Ford’s move is a relief for municipalities in the near-term, but there’s still trouble ahead. Ford was clear the plan is still to make these kinds of budget reductions — just next year, instead of this year.
But will removing the retroactivity element really make the notion of cutting funding for public health and child care more popular?
With more time, can municipalities find savings to offset cuts?
City of Toronto report
I can’t speak for the financial situation of every Ontario municipality — imagine if I could, you’d be so impressed — but in Toronto it’s hard to buy the notion that the city just hasn’t been looking hard enough to find efficiencies.
For more than eight years, city departments have received direction before each budget requesting they either freeze spending or find savings.
At least on public health, the provincial government has indicated that they may not just reintroduce the same cuts. Speaking to media today, Cressy said the city had been told that the province would consult with municipalities and health providers before making their next move.
What about other cuts?
Mike Crawley @CBCQueensParkConfirmed, as reported first by @robertbenzie, the Ford govt is reversing its retroactive 2019 cuts to municipal funding, including to public health and child care. However, future years cuts will continue as planned. Watch the announcement at 1015 #onpoli https://t.co/r1JzFo20yZ
Ford made it clear today that his government is not planning to reinstate the increase to the municipal share of the provincial gas tax. The increase was put in motion by the previous provincial government (as a consolation prize after Premier Kathleen Wynne denied Tory the ability to toll city highways) and Ford promised to follow through when campaigning last year.
City Manager Chris Murray has calculated the loss of expected funding to amount to a $24 million hit to Toronto in 2019 (so at least one retroactive cut remains) and $1.1 billion over ten years. Most of the revenue was to go toward maintaining TTC infrastructure.
The provincial government is also not backing off plans to pass Bill 108 — the “More Homes, More Choices Act” — which city planning staff say puts hundreds of millions earmarked for community infrastructure at risk through changes to development charges, parkland dedication and other planning tools.
Expect Tory to play along with Ford’s desire to have municipalities review their budgets and hopefully find savings, while also continuing to push back.
The mayor’s negotiation tactics with Ford’s government have lately proven to be pretty effective. Not only did his work help to stave off most of the immediate cuts, he also played a role in the provincial decision to hold off on uploading Toronto’s subway system for at least a year.
And today Ford has shown more weakness. Seems no reason to back down now.
Fact-checking Ford’s fiscal claims about Toronto
Toronto and other municipalities may have won a battle today, but the war of words between City Hall and Queen’s Park is expected to continue for months and years and, well, maybe decades? We’ll see!
Given that, I thought it would be useful to do some fact-checking on some of the more common things Ford and his allies are claiming about the city’s budget and fiscal situation.
Did Toronto’s budget “balloon” by 40% under Mayor John Tory?
It did not.
Last week, Premier Doug Ford released a statement that, among other things, said Mayor John Tory should have no problem finding savings because the budget has “ballooned” by 40% since he took office.
This is easy to disprove. Here’s a chart of Toronto’s gross tax-supported operating budget since 2009:
2014 was the last budget passed by the Ford administration — though, at the time, Mayor Rob Ford had been stripped of many of his powers and Deputy Mayor Norm Kelly was in charge. (Remember that?)
But for Tory, that’s still the starting point: $9.66 billion. The 2019 budget is $11.56 billion. That’s a difference of 19.6%, about half of what Ford claims.
A note on comparing this stuff: the city has always separated its budget into three major components. There’s the tax-supported operating budget (above), the rate-supported budget which includes garbage, water and the Toronto Parking Authority, and the capital budget, which is generally presented as a ten-year capital plan.
In recent years, finance staff have increasingly started combining the tax- and rate-supported budgets when stating the size of Toronto’s operating budget. This can lead to potential for confusion when doing comparisons. Heck, Even Rob Ford was once confused by it.
The city’s website doesn’t do any favours either, with a “previous budgets” page that alternates between combining the tax and rate in some years and using only the tax in others.
I’ve used the tax-supported budget as a point of comparison here because I think it’s the fairest representation of what the city and province are fighting about, but even if you include the rate-supported budgets, the city’s overall operating budget increased from $11.2 billion to $13.47 billion, an increase of 20% — again, nowhere near 40%.
BONUS FACT CHECK: Speaking on CBC’s Power & Politics last week, MPP Stephen Lecce claimed Toronto’s budget had gone up by nearly 100% over the last decade. He’s even more wrong than the premier is. The increase since 2009 is 32%.
Does Toronto’s public health department have a big surplus?
This is a weird one. In an op-ed for the Toronto Sun last week, Minister of Health Christine Elliott (no relation) thought it worth pointing out — not for the first time — that Toronto Public Health posted a surplus in 2011:
Indeed, over the past 10 years, Toronto Public Health has run a cumulative surplus of $52 million, with nearly $12 million in unspent money in 2011 alone.
Fact check: secret calendar sources tell me on background that 2011 was eight years ago and is not hugely relevant to what’s happening now. At last check, Toronto public health was projecting a 2018 net budget variance (surplus) of $66,000, or 0.1% of its budget.
The $52 million cumulative surplus figure over ten years works out to an average annual surplus of $5.2 million over that time, but surpluses have been smaller in recent years. In 2017 it was $685,000. In 2016 it was $2.2 million. This is a department where the budget has been getting tighter, not looser.
Because the City of Toronto cannot post an annual operating deficit, city departments plan for a small surplus to allow for some breathing room. A small end-of-year surplus is not evidence that a department has been given too much money.
Was the province demanding a less than 1% cut to Toronto’s overall budget?
No, they were asking for more.
In Ford’s statement above, he claims “the total amount of our funding changes amount to less than 1% of the City of Toronto’s overall budget.”
It’s close, but even if you go with the combination of the tax-supported operating budget and the rate-supported operating budget ($13.47 billion for 2019) the amount the City of Toronto was facing in 2019 cuts ($177.65 million, per the city manager) it’s more like 1.3%.
Okay, that feels like splitting hairs, but this is also a question that calls for more nuance. The city’s gross operating budget is made of a variety of revenue sources, many of which are beyond the city’s control (i.e. provincial or federal funds) or earmarked for a very specific purpose (i.e. TTC fares and other user fees.)
The city keeps a “net budget” to separate that stuff out and focus on the part they can control — which is the part paid for with property taxes. Here’s what Toronto’s net budget looks like since 2009:
If you take the 2019 net budget figure of about $4.3 billion — I’m separating out special tax levies for the Scarborough Subway and Tory’s City Building Fund — that means the city would be looking to cut 4.1%, four times as much as Ford claims.
Did Doug Ford help find $774 million in savings in one year at City Hall?
He did not.
Here’s Ford again, from the May 15 Hansard transcript of the Ontario legislature:
When I was at the city of Toronto, we maintained a zero per cent tax increase the very first year and found $774 million. Right now, the city of Toronto, Mr. Speaker, when I left it was a $9.6-billion budget; it’s over $13 billion—that’s almost a 50% increase in spending
Bonus fact check: an increase from $9.6 billion to over $13 billion — in addition to being a very, very wrong reading of Toronto’s operating budget — does not total almost 50%.
Let’s focus on that $774 million, though. Ford says he and his brother found that amount in savings in one year.
First, a flashback: it’s 2011. Rob Ford had just been elected mayor. Doug Ford came too. For their first budget, they decided to use the entirety of a $346 million surplus left to them by previous mayor David Miller to fund a residential property tax freeze.
That made the 2012 budget significantly more difficult to balance. Not only did the Fords need to do the usual annual budgetary maneuvering to bring things into balance, they also needed to replace the one-time surplus money.
They started that year with a $774 million hole in the budget, yes, but to say they covered it with found savings isn’t true.
They certainly tried. KPMG was hired to conduct a Core Service Review. Public consultations were held making it very clear that there was little appetite for moves like closing library branches. In the end, KPMG deemed just 1% of city services as discretionary, but also found 85% of services were being delivered at or below standard, suggesting that any opportunity to save money would probably be offset by necessary improvements to other service standards.
In the end, the city’s auditor said the $3.5 million auditor exercise may have saved somewhere in the neighbourhood of $12.6 million. Nowhere near the $774 million Ford is claiming to have saved.
So how did they balance the 2012 budget?
They cut $75 million worth of services, including the most significant TTC service cuts since amalgamation. They constrained budgets to the tune of $271 million — filling the hole they created with the prior-year tax freeze. Much of this was not savings, however. The $271 million included accounting tricks like reducing the amount budgeted to staff recently-completed capital projects.
Then they did what municipal governments generally do: they raised property tax revenue by 2.5%. They hiked TTC fares by a dime. They used $83 million in reserve funds, and found another $258 million through a combination of land transfer tax revenue and increases to other user fees.
The kicker? After public backlash, a majority of councillors determined that $20 million in the savings supposedly uncovered by the Fords were in fact unacceptable cuts to service. They voted against the cuts during Council’s budget debate.
Did Doug Ford save a billion dollars at City Hall?
For the ten billionth time, no.
Again, the simplest way to disprove this is to look at the charts above of the City’s gross and net operating budgets. Do you see the budget decreasing at any point? Savings that sizeable — a billion dollars was about 10% of the city’s budget — would be easy to spot on a chart of the city’s operating budget.
But it’s not there. Toronto’s gross tax-supported operating budget grew by $461 million when Doug Ford was at City Hall.
The Fords have gone to great lengths over the years to try to justify the billion dollar claim, but it’s hardly worth rehashing again. Here’s Daniel Dale’s summary of the claim from 2013:
In truth, the mayor’s fiscal claims are exaggerated. He has repeatedly claimed to have saved taxpayers $1 billion — a figure endorsed by the city’s senior bureaucrats but one that relies on creative definitions of “savings” and “taxpayers,” exaggerations and omissions. Many of his other fiscal claims are also suspect.
The “$1 billion” claim is based on: $24 million in “savings” from a user fee increase, $200 million from the abolition of the car tax, $78 million from garbage outsourcing, $6.4 million from cuts to office budgets, $89 million from a new contract his administration negotiated with union employees and $606 million from various “efficiencies.”
John Tory could use similar methodology to claim to have found savings. Tory’s first budget in 2015 included $85 million from “efficiencies and service changes”, and subsequent budgets would show the same kind of reductions. But he’s never added a bunch of disparate numbers like that up and claimed to have saved a billion dollars because that’s not generally how math works.
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Tax cut before the election: FAO report spells out Ford’s budget strategy
A report from Ontario’s Financial Accountability Office makes it real clear how Premier Doug Ford’s government intends to make the case for a second term: tax cuts.
After analyzing the government’s numbers in the 2019-2020 budget, the FAO suggests the PCs are planning to unveil cuts to taxes amounting to a $3.6 billion revenue loss by 2023-2024:
However, despite the government’s stronger economic forecast, the 2019 budget included a lower projection for tax revenues relative to the FAO. The budget’s lower tax revenue forecast suggests that the government has incorporated provisions for future unannounced tax policy changes that would lead to lower revenues.
While the 2019 budget did not provide details on design or implementation, the FAO estimates that future unannounced tax policy changes, assumed in the government’s forecast, would reduce revenue by $0.2 billion in 2020-21, growing to $3.6 billion by 2023-24.
Expect a 2022 campaign fuelled by talk of tax cuts that only a Ford government will keep.
Then there’s this:
The FAO also found that the Ford government will need to find an additional $6 billion in program cuts to meet deficit targets. Hope you’re not tired of news cycles about the impacts of program cuts. We’ve got lots more to go.
In other news
Transit guru Steve Munro has obtained a list of the most crowded TTC routes, according to their crowding standards. Top three most crowded bus routes at peak: Dufferin, Scarborough Express and Lansdowne. In non-rush hours, the top three are Don Mills, Dufferin and Warden.
Spacing’s John Lorinc makes the case that the city needs to start asking tough questions about the driverless future — it’s not just about cars, but also “package bots”, van “mules”, shuttle buses and maybe even “augmented feet.”
The week at Toronto City Hall
MONDAY: The Economic & Community Development Committee met. On the agenda: the city’s latest Economic Bulletin, which includes this good demonstration of just how large the GTA economy is — about the size of all of Quebec.
City of Toronto report
TUESDAY: The Planning & Housing Committee meets. On the agenda: the city’s new policy for inclusionary zoning. The Toronto Star’s Emily Mathieu has details on why and how the city will forge on with the zoning change meant to create more affordable housing, even as the province’s Bill 108 changes the rules.
Also on the agenda: new policies to support rooming houses, an update on expanding the housing allowance program and a report on how the city is using Section 37 funding to build affordable housing units on Queen East. Also: a bunch of sign applications for some reason? That’s new.
WEDNESDAY: Toronto’s Budget Committee meets to make a few capital budget adjustments. The Sign Variance Committee will be giving the thumbs up or thumbs down to a bunch of new signage. And the Preservation Board will be considering heritage items — and getting an update on how Bill 108 will affect heritage rules.
THURSDAY: The Toronto Police Services board meets. On the agenda: an update on the Facial Recognition System (FRS) purchased by TPS for about $450,000:
Between March 22, 2018, and December 31, 2018, 1,516 F.R.S. searches, representing approximately 5,000 still and video images, were conducted by F.I.S. F.R.S. comparisons resulted in potential candidates being selected for approximately 60% of all the images being searched, and of these, approximately 80% led to the identification of the criminals responsible for these criminal offences
Thursday also marks the start of the Federation of Canadian Municipalities annual conference coming to us this year from scenic Quebec City, Quebec.
FRIDAY: An off-day. Good day to recover from Game 1 of the NBA Finals featuring — holy hell wow wow wow — our Toronto Raptors.
City Hall Watcher #20
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