Call it Mythbusters: municipal finance edition.
Mayor John Tory and members of Toronto City Council were issued a report last week detailing the city’s long-term financial direction. It’s an amazing piece of work, containing all kinds of nerdy charts and numbers from the city’s recent budgets.
Taken as a whole, the report works to smash popular myths about the state of Toronto’s finances into tiny little pieces, and then grind those pieces into dust.
Take, for example, the popular idea that the city has a bloated operating budget – a gravy train, you might call it – always rapidly increasing.
Myth busted. According to the report, when you factor in inflation and population growth, spending has actually declined over the last six years. The city spent $4,291 per person in 2010 compared to $4,126 this year.
And what about the idea that Toronto property taxes are out of control, choking the embattled homeowners in this city who — aside from owning a rapidly appreciating asset in a great city — can’t seem to catch a break?
That’s a busted myth too.
Since 2010, when adjusted for inflation, the city’s overall take from property taxes has gone down by 4.8%. Homeowners have gotten a break.
The difference in revenue has been made up for in two ways. The first is through the city’s land transfer tax, which relies on the city’s overheated real estate market staying hot — a risky proposition.
The second way is crazier: as inflation-adjusted revenue from property taxes has declined over the last six years, revenue from the TTC – most of which comes from fares — has increased by 17.7%.
The numbers don’t lie. Part of the way Toronto has kept property taxes low is by hitting up transit riders for more of their cash.
But the myth busting doesn’t stop there. The report also addresses those who might say there’s nothing really wrong with the city’s financial direction. Low taxes, constrained spending – is that really so bad?
It is. It’s really bad. Because this strategy of limiting tax revenues and choking program spending leaves very little room for spending on major projects. In pursuit of a permanent low tax scenario, city hall has continuously pushed off vital infrastructure spending in areas like transit and housing.
The current total cost of all those necessary but unfunded city projects? A whopping $29 billion.
The truth, laid out so effectively in the city report, is that there is no way to address that backlog without committing to tax increases — either through higher property taxes or a new source, like a sales tax or road tolls.
That’s a hard reality to accept, I know. But the only alternative is to believe a bunch of myths, and they’re all so thoroughly busted.
This post was originally published at http://www.metronews.ca/views/toronto/torys-toronto-matt-elliott/2016/05/23/new-city-report-busts-toronto-budget-myths.html on 2016-05-24T00:00:00.000Z