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Debunking Ford Nation's favourite budget chart

By: Matt Elliott Metro, Metro Canada Published on Wed Jan 23 2013

It's the chart that's supposed to make all this Mayor Rob Ford wackiness worth it.

But here's the problem: it doesn't really prove anything.

The chart Ford's supporters like to point to looks something like this, showing the size of Toronto's gross operating budget since the former municipalities of Metro Toronto were hastily smushed together:

At first glance, it seems legit. Look at those bars going up, up and up some more during Mayor David Miller's terms. Then look at how Mayor Rob Ford immediately — maybe heroically — stepped in and stopped the increases in their tracks. Under Miller, the gross budget went up 15 per cent in his first three years. Under Ford, it's increased by less than half of one percent in the same amount of time.

You could call it a victory for conservatism over socialism, but that would be ridiculous. As I've written before, the gross operating budget is a lousy measure of the city's fiscal health. Both because Toronto has to balance its budget every year — with no deficit spending — and because a huge percentage of the gross budget is made up of programs that are funded via provincial funding transfers or supported 100 per cent with user fees.

Let's look at some examples. Last week, Coun. John Filion moved that the Toronto Building office hire a few additional staff. It was an easy decision, approved by a wide margin. Developers who do business with the city have long complained about long processing times for permits and other paperwork. Filion moved that the city marginally increase the cost of those permits — something businesses have said they're willing to accept — and use the extra revenue to pay for new staff.

Cost to the average taxpayer? Zero. Cost to the average person who doesn't regularly need construction permits? Nada. Impact on the gross operating budget? It grew by about $200,000.

The same thing happened with Coun. Janet Davis' motion on childcare. In that case, the province had opted to provide new funding for childcare services at the municipal level. Davis moved that, instead of dumping all that money into reserves, the city should use it to fund new subsidized spaces.

Again, the move represented zero cost to the average taxpayer in Toronto, but it pushed up the size of the gross operating budget by a few million dollars.

It's hard to argue that these kinds of level-headed decisions stand in opposition to “fiscal discipline.” But they did contribute to the growth of the gross operating budget.

In that light, a fairer comparison of city spending growth is to look at what finance staff call Toronto's net operating budget. It's called as such because it represents city expenditures that are left over once you account for all the user fees, transfer payments from other governments, investment income, fines, and so on. It's the remainder that has to be covered through the assessment base via property taxes.

If we just look at the City of Toronto's net budget since amalgamation, on the same scale, the chart looks like this:

Since amalgamation, the part of the budget paid for with property taxes has increased from $2.5 billion to $3.7 billion. That represents an increase of about 2.6 per cent per year, which is pretty darn close to matching the rate of inflation.

Under Miller, the average increase was about 3.1 per cent per year. Under Ford, that increase has been a bit smaller. He's closely kept to the pattern set by Mayor Mel Lastman in his first term, with below-inflation increases that will probably have to be made up for with larger increases over the next decade. You can't fight inflation for long.

But that's just nerdy detail. The larger point of this graph should be clear. Increases to the net operating budget have been kept small for all of amalgamated Toronto's history. And since the gross operating budget is at best a misleading metric, the whole narrative of out-of-control spending at City Hall starts to fall apart.

But how did the gross operating budget increase so much under Mayor David Miller?

Fair question. There's a bunch of reasons, but let's start with another graph.

During the seven years that make up the Miller era, revenue from user fees, government transfers and other revenues increased faster than revenue from property taxes — that nebulous 'other' category includes everything from investment income to draws from reserves. By the time they wrapped up the 2010 budget, the administration had knocked the percentage of the gross operating budget funded by property taxes down by seven percentage points, from 45 per cent to 38 per cent. They also introduced the since-killed-off Vehicle Registration Tax and the still-humming Land Transfer Tax, which were designed to offset further property tax increases.

As for where the money was spent, look to where staffing levels have grown. During the first decade of amalgamation, the City of Toronto shed 396 positions in Corporate Management, Administration and Governance and 160 positions from departments supporting basic municipal services. Amalgamation did, in fact, bring some efficiencies.

But that was more than offset by 875 new hires at Police Services, 340 new staff at EMS, 1,500 new positions in departments mandated and/or cost-shared with the provincial government and nearly 2,000 new staff at the TTC.

This post was originally published at on 2013-01-23T00:00:00.000Z

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Matt Elliott

City Hall watcher, columnist and policy wonk in Toronto.
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