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New Land Transfer Tax

City staff fall short on cuts

TORONTO STAR FILE

Despite two weeks of emergency cost cutting, Toronto city manager Shirley Hoy has been unable to find all of the $100 million in savings called for by Mayor David Miller.

Today, she'll release a "cost containment" report slashing an immediate $83 million from the city budget, a fraction of the $575 million deficit the city expects to be staring at next year. The cuts will reduce services "right across the board,'' she said yesterday.

Pretty well every division connected to city hall – police, fire, parks and recreation, solid waste management and more – will come under the knife in some way, though certain areas won't be touched for reasons of public safety.

"I'm not going to be accepting any options that take fire trucks out of service. That's a huge public safety issue. In the same way we're not going to take paramedics out of emergency vehicles,'' Hoy said.

That's a large reason why her work fell short of the mayor's target, imposed after city council voted 23-22 to defer until Oct. 22 a decision on implementing a land transfer tax and vehicle registration fee – two new taxes aimed at raising $356 million annually to ease Toronto's budget crisis.

The new taxes were to come into effect at the start of next year, and delaying them created a fiscal emergency, according to Miller.

One reason containing costs proved so difficult for Hoy became apparent yesterday during a meeting of the Toronto Police Services Board. Police Chief Bill Blair, who had been ordered on July 20 to find $10 million in savings, told the board he could promise only about $3 million of that through means such as employee attrition and reducing out-of-town travel.

The board opted to seek a bailout of sorts, by appealing to the province to cover at least some of the skyrocketing $43.5 million cost of court security currently borne by the police budget.

"The chief talked to me before the meeting today. The police have looked at everything. ... We worked with them to streamline wherever possible,'' Hoy said, calling Blair's cost-saving measures a "work in progress'' as the city continues its pursuit of savings.

Aside from demanding cuts of $10 million each from police, fire and ambulance, Hoy has ordered the TTC to find $30 million. Consideration was given to mothballing the Sheppard subway line and eliminating more than 20 bus routes, but decisions on those moves have been put off until September.

Other city services won't get such a reprieve today.

Everything from litter picking to non-emergency road repairs and tree trimming will be hit in Hoy's report. She refused to rule out the possibility of pool closings.

"I can't get into that level of specifics, but certainly all the major municipal services – parks, transportation, solid waste – we had to look at because those are the big budget pressure areas,'' she said.

The library system has announced $1.2 million in cuts including eliminating Sunday hours at 16 branches and not buying 14,000 items.

Hoy's cuts are expected to affect the city's 4,600 temporary workers, but Brian Cochrane, president of CUPE Local 416, promises a battle should the city violate contracts.

City workers in libraries, garbage collection and parks are "very anxious," he said, adding the city hasn't included the union in any discussions.

"We've just been told that there's going to be a briefing" this morning prior to the public announcement, he said.

The reduction in library hours is already being examined as to whether it violates a collective agreement. The contract may also guarantee seasonal employees advance notice before a layoff, Cochrane argued.

If workers are laid off illegally, the city may be liable for retroactive wages, Cochrane added.

"I don't know to what end they expect this to be a viable solution if they have to wind up paying (retroactively) if they violate the collective agreements,'' he said.
 
Facing reality comes at high cost in T.O.

Aug 10, 2007 04:30 AM
Royson James

In the end, the people pay.

Always.

At high noon today, Toronto's top bureaucrat and city manager Shirley Hoy will announce a battery of service cuts designed to net the city $83 million this year – money the mayor thought he had last month when he proposed two new taxes totalling $356 million.

City council balked, deferring the tax decision to October. This triggered the mayor's directive that staff embark on "cost containment" to find the money anyway. And today we learn the damage.

The fallout from the unexpected city council vote raises some issues. Among them:

Did council know that its July vote to defer action on the new taxes would lead the mayor to impose these cuts immediately?

In other words, apart from veiled threats imbedded in the usual rhetoric of debate, did Mayor David Miller tell city council the choices now apparent? A land transfer tax and vehicle registration tax – or immediate service cuts and layoffs.

Secondly, if the $83 million in cuts can be identified this quickly, why were these measures not in play much earlier?

We've just gone through a civic election where little of this was contemplated or debated. Every year, the city budget has progressed in a manner designed to create insomnia and lead to the impression that there will always be a saviour and a bailout, so don't worry.

And now – boom!

Also, how did $100 million in cuts become $83 million? Why the change?

Officials say the estimate is just that, an estimate. And some city council motions could change the amount of money to be collected by the two taxes.

But the biggest factor is that the figure is surely bogus.

It's based on an estimate that, should council approve the taxes in October – and you can bet the farm council will – the delay will force city hall to wait until March 2008 to implement the new taxes. The delay means lost revenues.

But city staffers tell a different story. It's entirely possible, with a little help from the province, to approve the taxes in October and not lose more than a tiny portion of the tax revenues. So, we may be only $40 million short, when all the accounting is done.

If that is so, today's exercise would be more about blaming the mayor's opponents than fixing the city's fiscal mess.

Finally, if the city is more than a half billion in the red for next year's budget, imagine the extent of the further cuts – or taxes – to cover the spiralling costs next year and years after that?

In other words, much more of the same to come – only worse.

The spin from city administration is that they had an orderly financial plan in place and that cowardice on the part of some councillors plunged the city into cuts and service reductions and fear.

Wish it were so.

Rather, the current crisis has forced everyone to face reality. Toronto is living beyond its means, not because our politicians are spendaholics, but because they have not told us the truth about the personal cost of maintaining our standard of living.

The mantra has been to blame the province, the federal government, the police, the TTC, the welfare recipients, the recession. Now, it'll be clear we must confront the monstrous budget and beat it with help from everyone, on all fronts.

Service cuts. Higher property taxes. Provincial and federal help.

In the end, the people pay. Always.
 
So how do the citizens of Toronto want to deal with this budget problem? Well, they don't want more taxes. They also don't want to cut services. Firing staff is apparently out of the question as well. But cutting out the free coffee for councillors seems like a great idea!

The budget problem could be dealt with by the province taking back its responsibilities. One should be straight up and ask McGuinty if he agrees in full with the actions of the Harris government. If he doesn't (and he has made noises that he does not agree with it), then his government ought to do something about it - and fast.

Only after the provincial government picks up where it left off will we be able to actually see the municipal state of affairs with respect to municipal taxes and what they ought to be used for. The trouble is the confused results of the inane "who does what" exercise of the past has, no doubt, left a significant number of real municipal needs wanting.

The Eye article is right on. Toronto was the perfect entity to hide a provincial tax cut in: big and helpless, with enough money to cushion the responsibility shell-game for a little while. The trouble is that the Toronto Act, and its new tax powers, are the perfect foil to this state of affairs. Now every Premier and Premier wanna-be is throwing the act in our face, telling us to pay the bill oursleves while acknowledging that there is a problem - just not their problem anymore.
 
I wish, I wish, I wish SO much that this was widely understood and internalized, as this is THE crux of all the issues involved. To all those still looking at City Hall as the culprit, re-read the underlined sections in particular and please finally understand how you have been manipulated and for what purpose, and to whose drum you're dancing. The neoliberals' plan is working out just peachy, simply because so many people STILL don't understand the masterplan that they are playing into. It's really all quite maddening, and totally predictable - as the Eye piece points out, these are now old-hat tactics, yet the bulk of us continue to just plain not get it. Please, all - finally GET IT, and understand the true source of the situation, and the real reasons for it. If you don't grasp this, then you will almost certainly fundamentally misunderstand everything that's going on at all 3 levels of gov't and why.
The problem with this analysis is that like most of Eye's/Now's political commentary, it is far too simplistic. The truth is, the problem stems from the right wing agenda (Harris downloading and McGuinty not uploading) and the left wing agenda, CUPE demanding (and Miller and co. granting) wages and benefits several multiples of what these people would be making for equivalent work in the private sector, and Miller and his henchmen spending tax dollars like drunken sailors on projects with questionable merit. For the idealogues, who like to see the world in black and white, only Harris is to blame, or only CUPE and Miller are to blame. I think the world is a more complicated place than that, and the blame can be shared equally between the extreme right and the extreme left. What this province and city need desperately are pragmatists who will seek balance.
 
The problem with this analysis is that like most of Eye's/Now's political commentary, it is far too simplistic. The truth is, the problem stems from the right wing agenda (Harris downloading and McGuinty not uploading) and the left wing agenda, CUPE demanding (and Miller and co. granting) wages and benefits several multiples of what these people would be making for equivalent work in the private sector, and Miller and his henchmen spending tax dollars like drunken sailors on projects with questionable merit. For the idealogues, who like to see the world in black and white, only Harris is to blame, or only CUPE and Miller are to blame. I think the world is a more complicated place than that, and the blame can be shared equally between the extreme right and the extreme left. What this province and city need desperately are pragmatists who will seek balance.

If you compare the cost of Harris-era downloading to recent CUPE increases, I think that even the most facile comparison would show that downloading has cost the city far more. Of course excessive Union demands cost the city, too, but so do any excessive demands.

If you want to compare total wages of city employees to the costs of downloading, then you are speaking to something different. But to do work, people must be paid, so a considerable portion of the city budget will go to paying people - regardless whether that work is done by the public or private sector. Really, there should not be any surprise in that. It should also make sense that city employees are at least capable of affording to live in the city in which they work.

As for the issue of black and white simplification, can you provide real examples of excessive spending (and I mean excessive) on the part of Miller and his "henchmen"? It is one thing to accuse, but something quite different to prove. Then again, can one actually prove that the city would save $500 million if it privatized services? If not, then the best that one could say is that the city could save some money - but only a fraction of that $500 million - by cutting wages or privatizing services. It could not save all that money from doing so. So the fundamental problem still remains.

The balance you seek comes when the province properly uploads its responsibilities. Municipal taxes were never intended to pay for programs that were once supported by the provincial budget.
 
Well, in terms of getting Toronto's fiscal house in order, I don't think we can take the approach of focussing on the provincial downloading, or excess wage demands by the unions. Indeed, it is probably most politically palatable to make some efforts on both fronts.

Frankly, CUPE is far too strong and has some extremely questionable elements in its leadership. Toronto should make a stand against CUPE, no matter how painful (and it'll probably be painful), and privatise some services where it makes sense. I think garbage collection is one of those areas. Many surrounding regions use private collection services, so there is plenty of indication that it works, and indication of what potential savings will be.

Park and grounds maintenance is another area that might make a lot of sense to contract out. I think we should reasonably examine these alternatives.
 
So my bottom-line question is, what are the prospects of these two new taxes finally being approved in October? In other words, has Miller's point been made, or will the waffling councillors be so resentful of the way this has been handled--and, even as a big Miller supporter, I think he could have done much better--as to vote 'no'?

I can't imagine that, if no provincial help is coming, a majority on council would effectively vote for bankruptcy. Royson in the Star and Barber in the Globe seem to be suggesting the same, and I hope they're right. Anyone have any insight on this?

And then, there's the little-commented-upon Urquhart column in the Star claiming that this is all a carefully-planned dance that will culminate in some degree of uploading. If there is a partial upload I could see the taxes dying for sure, even though they would probably still be needed...

What I would love to see Miller do is go on live prime-time television and explain to the city, in plain and direct language, the exact outlines of the fiscal crisis, who is to blame for it (the province), and why these new taxes are essential. He should then challenge any councillor to articulate a comprehensive plan
for fiscal stability and necessary investment that does not involve a massive injection of new revenue. I'm sure CityTV would give him the airtime free, since money is obviously so tight!

Anyway, what a frustrating time to watch municipal politics. I've had about enough of reading about Denzil Minnan-Wong's incessant whining.
 
The average employee of the City of Toronto makes in excess of $60,000 per year plus 23% benefits. This is far more than the average federal or provincial employee makes and far more than the average Torontonian makes. Nobody is saying city employees shouldn't be able to afford to live in Toronto. The majority of Torontonians survive on far less money. If your skill set only qualifies you to do menial labour such as picking up litter in the park, your pay should be in line with that skill set as it is in the private sector. My argument is that low skill workers such as litter pickers (as important as that job is) do not deserve to be making $46,000 plus 23% benefits. And that's just one example of CUPE's impact and how it has cost tax payers billions of dollars.

Here’s my first proposal: an across the board 20% wage and salary reduction for city employees. That would be more than enough to balance the budget. Just as an example, that would mean that a city litter picker would still be making almost $40,000 per year plus 23% benefits. Even after a 20% wage reduction, this pay still looks absurdly generous when compared to the pay for similar work in the private sector. As another example, city cashiers make twice as much as cashiers in the private sector. Slashing their pay by 20% would mean they are still paid 70% more than what people in the private sector are paid. At the top, the number of people making over $100,000/year more than doubled since Miller took office. As many people on this board who have dealt with the city have testified, there is massive inefficiency in the bureaucracy. I’m sure hundreds, if not thousands of these workers could be ditched without anybody noticing.

My next proposal: scrap the “Fair Wages” policy. This policy enables Miller and company to argue that money can’t be saved by privatizing and contracting out. Unfortunately, this is true, because the policy forces the city to pay nearly union rates for any work that is privatized or contracted out. Get rid of this law, and the city could save hundreds of millions annually by contracting out.

Another proposal: open infrastructure projects to the bidding process. Miller and company refused to consider a proposal for subway cars from Siemens that could have saved the city over $100 million, because Bombardier used unionized Canadian labour and Siemens’ subways are made in China. Imagine how much more expensive your annual budget would be if you decided to buy only made in Canada goods over Chinese goods. The city could save a lot of money by opening up infrastructure to competition, instead of automatically giving the work to unionized Canadian labour. This is just one example.

Miller should agree to a fair, unbiased external audit. So far he’s refused, which suggests that he is afraid of what it will find, and expose his love affair with CUPE and the other unions.

McGuinty or Tory, whoever is premier in a few months needs to get a better deal for Ontario, and get the equalization program fixed. Quebec is now a have province and Ontario is becoming a have not province, yet the money continues to flow from Ontario to Quebec and other provinces. If this situation can be fixed, then the province will easily be able to upload the services downloaded onto municipalities without increasing taxes or incurring a deficit.

If Ontario can get a fair deal, and upload municipal services and Toronto can get a mayor who is willing to stand up to the unions and get spending under control, Toronto will be awash with money. But I'm not holding my breath for any of this to happen.

Those arguing that Toronto needs higher taxes to improve the city seem to overlook one very important fact: higher taxes leave less money for consumers. This will inevitably lead to empty store fronts and restaurant closings. Is it not vibrant retail and dining establishments that make cities appealing? Keep on raising taxes and you will see massive stretches of once thriving establishments closing and dead retail strips. Tourism will drop even more. That is what kills cities. If you want a vibrant city, you can't tax its citizens to the point where they can't afford to support local shops and restaurants.
 
How bout we pay litter picker-uppers $20,000 instead of $40,000 and hire twice as many people? Young people would apply in droves to make $10 an hour doing that rather than make $8 at McDonald's or Wal*Mart.
 
the problem stems from the right wing agenda ... and the left wing agenda ... For the idealogues, who like to see the world in black and white, only Harris is to blame, or only CUPE and Miller are to blame. I think the world is a more complicated place than that, and the blame can be shared...

That's quite an abrupt about-face from someone who posted virtually nothing but rigidly narrow anti-union venom from the outset, but I'm certainly not complaining. The "problem", however, with this new pov is that it attempts - in typical right-wing fashion - to create a false equivalency where none actually exists:

If you compare the cost of Harris-era downloading to recent CUPE increases, I think that even the most facile comparison would show that downloading has cost the city far more. Of course excessive Union demands cost the city, too, but so do any excessive demands.

Hydrogen has pretty much spoken for me recently in this thread, so I won't repeat his points. Blaming the now-standard neoliberal policies of Martin and Harris for the large bulk of TO's current predicament is not at all based on black-&-white perception, it is simply reality. Whether or not one believes those policies were for the best is a matter of opinion - what those policies have intentionally led to is not:

http://en.wikipedia.org/wiki/Starve_the_beast
.
 
Toronto's problems began when they accepted the downloading. Imagine if the Feds told the Province, okay, you're now responsible for funding National Defence. The Province wouldn't have said okay, we'll give it a try and do our best; no, they would have told the Feds to shove it. When the Province told the City that they had to fund social housing, the City should have said that's not our job, we're not going to do, and we'll be sending anyone who needs shelter to the lawn outside Queen's Park, with a new tent supplied by the city.

On a side note, my brother from Mississauga told me that his city sends over a hundred million a year to Toronto to help cover public housing, since Mississauga's downtrodden generally head to Toronto. Is this funding exchange true?

As for the Feed the Beast matter, well, Ontarians got what they voted for. Harris said he was going to cut taxes, and by the end of his first term we certainly saw that he was making some nasty cuts, but Ontarians (though fewer Torontonians) voted for his again.
 
Beez:

Toronto's problems began when they accepted the downloading. Imagine if the Feds told the Province, okay, you're now responsible for funding National Defence. The Province wouldn't have said okay, we'll give it a try and do our best; no, they would have told the Feds to shove it. When the Province told the City that they had to fund social housing, the City should have said that's not our job, we're not going to do, and we'll be sending anyone who needs shelter to the lawn outside Queen's Park, with a new tent supplied by the city.

Short of breaking the law, what you have suggested is not possible - the province have full constitutional authority to do whatever they wanted to municipalities - to which they have sole jurisdiction. Besides, that downloading happened during the Harris era; amalgamation also saw massive citizen opposition, did it go anywhere?

On a side note, my brother from Mississauga told me that his city sends over a hundred million a year to Toronto to help cover public housing, since Mississauga's downtrodden generally head to Toronto. Is this funding exchange true?

It's more like $40M, and it doesn't go to social housing - it's provincially mandated social services in general. That's what the GTA social services pooling refers to - and it will be phased out in the next 7 years. Very little benefit to the City of Toronto since it wasn't uploading per se.

AoD
 
Toronto's problems began when they accepted the downloading. Imagine if the Feds told the Province, okay, you're now responsible for funding National Defence. The Province wouldn't have said okay, we'll give it a try and do our best; no, they would have told the Feds to shove it. When the Province told the City that they had to fund social housing, the City should have said that's not our job, we're not going to do, and we'll be sending anyone who needs shelter to the lawn outside Queen's Park, with a new tent supplied by the city.

The budget problem could be dealt with by the province taking back its responsibilities. One should be straight up and ask McGuinty if he agrees in full with the actions of the Harris government. If he doesn't (and he has made noises that he does not agree with it), then his government ought to do something about it - and fast.

What I would love to see Miller do is go on live prime-time television and explain to the city, in plain and direct language, the exact outlines of the fiscal crisis, who is to blame for it (the province), and why these new taxes are essential. He should then challenge any councillor to articulate a comprehensive plan for fiscal stability and necessary investment that does not involve a massive injection of new revenue.

3x totally agree - I have no idea why any of these things didn't happen. As for Beez's suggestion being potentially illegal, I think what he means is that the city should have raised holy hell over this issue at the time, and used whatever means possible - stunts, political brinksmanship, legal stalling, fiscal games, whatever - to prevent this inevitable time bomb from being successfully planted. No matter what the constitution/law states, there remains always a line beyond which resistance is necessary - what if McGuinty told us tomorrow that the municipalities are now responsible for ALL provincial matters, while the province will keep all tax revenues? Should the city just shrug in resignation and swallow that shit sandwich? I say no - at some point you push back hard with whatever you've got, getting creative when needed. Otherwise you're simply someone's bitch.

As for the Feed the Beast matter, well, Ontarians got what they voted for. Harris said he was going to cut taxes, and by the end of his first term we certainly saw that he was making some nasty cuts, but Ontarians (though fewer Torontonians) voted for his again.

Sad but true. People get the gov't they deserve, though as you allude to, in this case it's more like TO is getting the gov't that only the 'burbs n' sticks deserve (which was the unstated plan to begin with).
 

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