Archived columns and blog posts by Matt Elliott

Doug Ford says critics 'can't go after our fiscal record' – challenge accepted

By: Matt Elliott Metro, Metro Published on Wed May 29 2013

Over the weekend, as the downward spiral continued, Coun. Doug Ford claimed in a CP24 interview that all the scandals facing the Ford family are just the inevitable result of the great work they're doing down at City Hall.

The media comes up with these negative stories, he said, because “they can't go after our fiscal record.”

Challenge accepted. My name is Matt and today I'll be going after the Fords on their fiscal record.

As the scandals have been heating up, Doug's been giving essentially the same stump speech all over town. Let's look at a few of his more common talking points.

False. Absolutely, definitively false. I've turned this number over in my head again and again and I can't find any fair accounting of the city's finances that supports the Fords as saving anywhere near a billion dollars. When Mayor Rob Ford took office, the gross operating budget was $9.214 billion. This year, it's $9.405 billion. That represents an increase of about $200 million, not a decrease of a billion dollars.

The net operating budget — the part of the budget you pay with your property taxes — increased from $3.534 billion to $3.713 billion. Also not a reduction of a billion dollars.

The first is that he is doing some kind of calculation that takes into account multi-year savings on various budget lines. For example, council's decision to partially contract out garbage collection is projected to save about $78 million over the life of the seven-year contract. He could be adding up a bunch of multi-year figures like that on both the capital and operating side of the budget. But that's cherry-picking and ignores all the moves the Fords have made that cost the city. Things like stalling Transit City for a year, removing the Jarvis bike lanes and firing senior bureaucrats.

The other theory? He's using an analysis put forward by the Toronto Taxpayers' Coalition which compares the growth of the city's operating budget over the first three years of Ford's term with the growth of the same budget over the first three years of Mayor David Miller's first term.

It's a ridiculous analysis, because it relies on an alternate universe scenario in which some left-wing mayor was elected in 2010 and presumes that mayor would have grown the gross budget at a rate equal to the first three years of Mayor David Miller's first term — years that were marked by an explosion of TTC ridership and a much-improved funding relationship with the new Liberal government at Queen's Park.

Claiming Mayor Ford saved money versus this phantom scenario is like claiming he prevented an ape uprising because some other hypothetical mayor may have endorsed experimenting on super-intelligent chimps.

Doug says: “We have successfully eliminated the budget gap. For a decade, Toronto relied on prior-year surpluses and one-time 'found money' to balance its operating budgets. In 2013 – that ended.”

Partial credit. Toronto has indeed relied on money left over from previous budget years for a long time.And while the 2013 budget was balanced without the explicit use of prior-year surpluses, it did use more than $47 million from the city's reserve funds, which have been beefed up over the years by — you guessed it — prior-year surpluses.

But don't forget: the city's budget process will always begin with an “opening pressure” that looks like a gap. That gap will only get bigger if the mayor and his new budget chief go forward with their strategy to cut revenues coming in via the land transfer tax and freeze property taxes.

Doug says: “We are the only government in North America to pass a budget that spends less money one year than it did the previous year.”

This is an old talking point, but still, yes, in 2012 the Fords passed a gross operating budget that was marginally less than the budget they passed in 2011. But that same year they also increased property tax rates by 2.5 per cent.

Why, if the budget decreased, did they need to increase property tax rates? For that, the key thing to understand is the difference between Toronto's gross and net operating budgets.

The gross operating budget includes virtually every city service or program. It includes — in addition to programs funded by tax dollars — other programs that are funded by user fees, provincial and federal transfers, investment income, grants and other revenue.

This makes it a lousy measure of fiscal health. If the province swoops in tomorrow and gives the city $100 million a year to run a new social program, that increases the city's gross operating budget by $100 million, even though it has no impact on Toronto's property tax base. Lots of totally innocuous and good things can cause the gross operating budget to increase. More TTC ridership can increase the gross operating budget. More usage of recreation programs operating at full cost-recovery through user fees can increase the gross operating budget.

And, much of the time, it doesn't impact the taxes you pay at all.

Gross operating budget growth since amalgamation looks like this:

And that indeed feeds into the Ford narrative that they've reversed some kind of runaway growth in government. But there's a better measure of budget increases as it relates to tax burden. It's called the net operating budget, which is a simple accounting of where property tax revenue goes.

Since amalgamation, net operating budget growth looks like this:

Doug says: Because of our fiscal discipline, international bond rating agencies like Moody's and DBRS have kept our credit rating strong – even while they lowered ratings for the province of Ontario.

Even Doug Ford has to admit that he can't take credit for this one. The city's credit rating is exactly where it has been for years. So either the Miller administration was just as competent as the Ford administration or both of them are equally terrible.

Doug says: “Over the next 10 years, we're reducing our debt by $804 million while still spending $1.2 billion more on our infrastructure needs.

True, but this is bad. As I wrote about earlier this year, the Ford team has quietly changed the city's ten-year capital plan. Instead of relying on good old-fashioned debt financing to pay for the city's capital needs, this new budget offers a mysterious $1.2-billion “financing strategy.”

And guess what that “financing strategy” represents? Per city staff, it's cash that's due to come from three things: sale of city assets, provincial and federal funding, and, yes, surpluses from the operating budget.

So remember that thing about not relying on prior-year surpluses anymore? They still are. Just now they're relying on them to fund capital purchases.

Doug says: “We have privatized garbage collection west of Yonge St. saving $88 million while improving service for our residents.”

Pedantic correction: garbage collection was contracted out, not privatized.

Real correction: that $88-million figure is over the life of the contract. The real figure for savings is about $11 million per year or so. (Most reports I've read have pegged the savings at about $78 million — I don't know where the extra comes from.) But it should be noted that so far all of these savings have gone into freezing the user fees attached to solid waste pick-up.

Still, if you're looking to name a Ford accomplishment, this is probably the best one.

Doug says: “This Mayor is fighting for the 'little guy,' to keep taxes affordable and low… 136,000 households in Toronto will get a rent reduction this year because we reduced property taxes for their landlords last year. And we're holding the line on their taxes this year as well.”

Sure, Toronto continues to enjoy the lowest residential property tax rates in the GTA, but this has been true for a long time. The rent reduction Doug is talking about comes as part of a strategy to lower commercial tax rates as a ratio of residential rates. That strategy has existed for about eight years as part of the city's long-term fiscal plan.

This post was originally published at on 2013-05-29T00:00:00.000Z

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Matt Elliott

City Hall watcher, columnist and policy wonk in Toronto.
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