Can Toronto rely on efficiencies to make ends meet?

Toronto mayor John Tory (R) and Budget chair Gary Crawford (L) leave a press conference where they briefed the media on the next city of Toronto budget that will be presented on Jan 20 2015. Fred Lum/The Globe and Mail

TORONTO –  Toronto’s Budget Committee is meeting Friday to have one final crack at the 2015 budget before it moves onto the Executive Committee and City Council for approval.

Amid the discussion and debate about the finer points of the final numbers, the overarching theme will focus on how Toronto intends to pay for all the services it provides.

Where will the money come from? Higher taxes? New taxes? Service cuts? Efficiencies?

There is next to no appetite for property tax increases or service cuts. Most Torontonians appear tone deaf to the fact they pay lower taxes than those living in the rest of the Greater Toronto Area.

Raise the question of “alternative revenue sources” or “revenue tools” and you risk the wrath of ratepayers screaming through social media and talk radio rants, “We pay enough already!”

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It has prompted all but a few to conform to Mayor John Tory’s strategy.

The mayor says this is not the time to be exploring new taxes. He prefers to engage the other levels of government and convince the province and the feds of the political wisdom of investing their “fair share” in the services Toronto provides. At the same time, the mayor insists city staff and council need to be looking for cost savings and efficiencies.

“Let’s focus, as I certainly intend to do in the coming year, on being able to look taxpayers in the eye, before I ask them for any more money and in any other different way, and say to them, ‘All the money we’re taking from you now is being spent in the best way that it can be,'” he told reporters at city hall.

So, in the absence of increasing property taxes beyond the rate of inflation or cutting services and beyond counting on an awakening at Queen’s Park and on Parliament Hill, the mayor and his budget chief are counting on “efficiencies” to make ends meet.

The mayor’s opposition to revenue tools and call for efficiencies was echoed, in a “strange-bedfellow” kind of way, by Councillor Rob Ford. It could be that the councillor thinks the mayor is echoing his tune but, either way, they’re singing from the same hymnal.

But all the talk about efficiencies hit a bit of a nervous stutter this week when a report from Toronto’s Auditor General Beverly Romeo-Beehler was added to the agenda of the Audit Committee meeting for February 27.

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It seems all the effort to find efficiencies came up lame. In fact, the effort to find efficiencies wasn’t even all that efficient.

The auditor general found that the city spent $3.5 million in consultants’ fees to produce 22 reports between 2011 and 2013. Three hundred recommendations later, the KPMG “Service Efficiency Studies” identified $16.1 million in cost savings. Subtract the cost of the studies and that amounts to just over $12.5 million. That’s barely pocket change in an $11 billion operating budget and about ten per cent of the $110.5 million in saving city staff had estimated.

The auditor general determined that city staff had already identified about $35 million in savings without help from the consultants and said another $60 million wasn’t really savings at all. It was a “one – time fund transfer of certain previously committed reserve funds.”

Without saying so explicitly, the auditor general’s report calls the staff accounting into question.

The irony in all of this is that the Rob Ford led council ordered these third party studies because they mistrusted the numbers coming from city staff.

But don’t blame the staff says Councillor Gord Perks.

He says it was part of the city hall culture – suggesting staff were just doing what they were told to the extent that “if you want us to say water flows uphill, we’ll say that.”

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Perks says the auditor general’s report shows there are no great efficiencies to be found.

“That the emperor has no clothes. If you want to have services, you have to pay for them. The ongoing claim that we can solve (budget) problems through savings was wrong then and continues to be wrong.”

Councillor Shelley Carroll, a former budget chief from the Miller years, is already selling the merits of new taxes as the only way for the city to move forward. She told Newstalk 1010’s John Moore on Thursday morning, it’s not about raising taxes, it’s about making taxes fairer.

“If we introduce these other tools then we’re redistributing wealth from wealth instead of the value of your home – property tax could stabilize. In most major cities of three million or more, and that’s pretty much what this city is, property tax makes up about 20 per cent of the budget. We’re relying on it in our budget to the tune of 40 per cent.”

Nothing ever happens quickly at city hall so it will be a while before this debate over efficiencies vs. new revenue sources graduates from a dull thud in the background to front line civic engagement.

But the champions are already mounting their steeds preparing for an important political joust that may do more to affect Toronto’s future than any grand transit plan.

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