For those who are keeping score, 2010 isn’t the first time the city’s bean-counters delivered an unexpectedly large budget surplus, nor is it the first time a sitting municipal politician has proposed using said surplus to cut property taxes and freeze TTC fares.
This year, as we all know, Mayor David Miller vowed that part of the new-found $104 million will be applied to scaling back the tax hike for 2010, and most of the balance will go to a “tax stabilization reserve fund” for 2011.
How’s this for déjà vu:
Back in early 2006, after city officials revealed the existence of a $68 million surplus, it was one Jane Pitfield — then running for mayor — who said council should use that windfall to…cut property taxes and freeze TTC fares!
According to The Star (March 29, 2006), the city chose to earmark those surplus dollars to reserve funds, and Miller unsurprisingly dismissed Pitfield’s proposal. “The money that is from last year’s surplus has already been used in the budget once,” the mayor said. “You can’t use money twice.”
Funny how the tables can turn.
Indeed, the politics of budgetary surpluses is a kind of hall of mirrors.
As anyone who has followed Miller’s career knows, he has always been quick to scold the upper levels for failing to invest their own surpluses in cities and urban infrastructure.
What’s more, Miller’s response to tax cuts by the other orders – notably the Harper government’s decision to roll back the GST in the wake of his “One Cent Now” campaign — has been unambiguously withering.
“Our cities can’t succeed without proper investment, and we can only have the funds to invest properly if we have a share of taxes that grow with the economy,” Miller told The Star in late 2007 as the Tories prepared to reduce the GST to 5%. “There’s an emerging national consensus, and this particular government is on the wrong side of that national consensus.”
Populist expediency, it seems, has won the day down at City Hall.
But Miller’s pirouette on the subject of surpluses and taxes isn’t just about election-year politics. The move also raises troubling questions about whether this council is following the rules it set for itself in the last term.
Back in April, 2005, Miller and council approved a Long Term Fiscal Plan, an update [ PDF ] to which was on display at budget committee last week.
This recent update was mainly about pushing the province to ante up a long-term deal to split the TTC’s operating shortfall.
It made no mention, however, of a salient provision of the original report [ PDF ]. Herewith, the relevant bits of the Long Term Fiscal Plan’s “Policy on the Management of Operating Budget Surpluses” (page 8):
“Starting with fiscal 2005…the Chief Financial Officer and Treasurer is authorized…to apply any additional surplus in priority order to:
Capital Financing Reserve Fund (at least 75% of the additional surplus); and
The remainder to fund any under-funded liabilities; and/or reserves/reserve funds, as determined by the Chief Financial Officer and Treasurer…”
(Did you notice anything in the foregoing about tax cuts?)
Worth noting, too, that the City, which loves to rack up awards for public sector management, bragged in its December, 2009, newsletter about the fact that the Long-Term Fiscal Plan received “the prestigious GFOA Award for Excellence in Government Finance in 2006.”
Too bad no one bothers to read that prize-winning document anymore.
Indeed, if council was actually following its own rules, much of that surplus should be used to help reduce interest charges incurred for capital works. So either everyone’s forgotten that 2005 plan, or it’s just easier to ignore it because there’s more political hay to be made from a tax cut.
The further irony is that the mayor and his council allies seem to be icing one long-term fiscal plan even while insisting that these latest proposals for the disposal of the surplus are evidence of multi-year budgeting.
Shelley Carroll’s budget committee is meeting on Friday. My question is whether this outbreak of amnesia will persist? Just asking.