“That man is the most honest politician in the country when it comes to saving taxpayers money,” Doug Ford told AM640’s John Oakley.
In truth, the mayor’s fiscal claims are exaggerated. He has repeatedly claimed to have saved taxpayers $1 billion — a figure endorsed by the city’s senior bureaucrats but one that relies on creative definitions of “savings” and “taxpayers,” exaggerations and omissions. Many of his other fiscal claims are also suspect.
The “$1 billion” claim is based on: $24 million in “savings” from a user fee increase, $200 million from the abolition of the car tax, $78 million from garbage outsourcing, $6.4 million from cuts to office budgets, $89 million from a new contract his administration negotiated with union employees and $606 million from various “efficiencies.”
Below, we deconstruct the claims behind the “$1 billion” plus some of Ford’s other boasts related to the budget and the economy.
THE MATH BEHIND THE $1 BILLION
INCREASE IN USER FEES
FORD SAYS: The taxpayers “saved” $24 million from an increase to user fees.
REALITY: Only if you define “saved” very creatively. By hiking fees for recreation programs, Ford took $24 million extra out of the pockets of city residents. How could this be considered $24 million in “savings”? The city’s chief financial officer, Rob Rossini, argues that it saves the general “taxpayer” money — by taking that money instead from a smaller group of people. But those people are taxpayers too.
ELIMINATION OF VEHICLE REGISTRATION TAX
FORD SAYS: The mayor says he saved taxpayers $200 million by eliminating the vehicle registration fee, as he promised to do during his campaign. The fee, introduced in 2008 under former mayor David Miller, required car owners to pay $60 to the city every year.
REALITY: The city estimated it would collect $50 million per year from the tax, so the $200 million figure for a four-year term is not outlandish on its face. But there are two problems:
According to an internal city document, only $43 million was actually collected from the tax in 2010. Multiplied by four, that is $172 million, not $200 million.
If it was a “saving” to hike user fees and force a particular subset of people (recreation program users) to take on a greater burden, how can it also be a “saving” to allow another group of people (car owners) to pay less and shift the burden back to the general taxpayer? It is nonsensical to count both figures.
OUTSOURCING OF WASTE COLLECTION
FORD SAYS: The city saved $78 million from his successful push to outsource household waste collection west of Yonge St. and east of Etobicoke.
REALITY: The union that collects the rest of the city’s garbage says the city’s estimate of $11-plus million in annual savings is millions per year too high. Even if the city’s numbers are correct, the $78 million figure is over the seven-year length of the city's contract with the private company that won the job. It is fair for Ford to take credit for all of the savings, even if some extend beyond this term in office, but he has not always made it clear that he is talking about a longer time period..
CUTS TO COUNCIL OFFICE BUDGETS
FORD SAYS: The city saved $6.4 million from his push to chop the expense accounts of the mayor’s office and the offices of the 44 city councillors.
REALITY: At the first substantive meeting of Ford’s term, in December 2010, councillors’ office budgets were reduced by a total of $900,000. The mayor’s office budget was reduced by a total of $700,000. That is indeed a $6.4 million reduction over four years.
But after Ford’s influence on council diminished, councillors in 2012 passed a series of motions to get taxpayers to pay for constituency offices, cellphone roaming charges and other items from another part of the city’s budget. While the total cost of those changes is not yet known, they will eat into the initial savings.
EFFICIENCIES
FORD SAYS: The city found $57 million in efficiencies in 2011, $327 million in 2012, and $222 million in 2013, for a total of $606 million so far.
REALITY: A line-by-line Star analysis of budget documents shows that only about $300 million of the “efficiencies” actually meet the standard definition of the word — changes that allow the government to accomplish the same tasks at a lower cost.
The analysis shows, for example, that about $116 million of the “efficiencies” are actually phantom savings that did not save the city money at all. In 2011, for example, the housing department withdrew $6.5 million from a social housing reserve fund, the social services department withdrew $7 million from a welfare reserve fund and the children's services withdrew $12 million from a child care reserve fund.
All three reserve withdrawals are counted among the $606 million. None resulted in the city spending less or operating more efficiently.
During 2013 budget negotiations, police Chief Bill Blair proposed a budget $21 million higher than the city wanted, but was later forced to meet the city's target. The supposed reduction — from Blair's hypothetical level of spending to the actual level of spending — is also included in the $606 million.
“We took that money out of the budget, took that money out of the tax levy,” Rossini argued. “That means taxpayers didn’t pay it.”
The $606 million figure originates with city finance officials, not Ford — but Rossini does not agree that there were $606 million in “efficiencies.” The city chart breaking down the $606 million, which was provided to the Star only after repeated requests over the course of a month, is titled “efficiencies and permanent cost reductions.”
“I know some people, when they’re talking, they just use the word ‘efficiency’ because it’s simpler (than to say) ‘efficiencies and other budget reductions and capital financing reductions,’” Rossini said.
Also included among the “efficiencies and permanent cost reductions” are about $73 million in service cuts. Ford campaigned on a promise not to cut services.
Also among the $606 million: a curiously calculated $84 million “compensation reduction.” The city says it saved $84 million by reducing pay to city workers.
But city workers actually got a raise in the union contracts negotiated under Ford — a wage freeze in 2012, a 1.5 per cent lump sum payment and 0.5 per cent salary increase in 2013, 1.75 per cent increase in 2014, and 2.25 per cent increase in 2015.
So how did the city come up with an $84 million “reduction”? It compared the actual 2012 and 2013 increases with a hypothetical situation where the pay hikes were larger. “If the city didn’t negotiate the lower increase, the actual increase would have been higher,” said spokeswoman Paula Chung.
OTHER FORD CLAIMS
TAX RATES
FORD SAYS: “I’m very proud today that Toronto’s tax increase over the last three years is lower than any North American city” and that “taxes are “lower than ever.”
REALITY: Neither claim is true.
Toronto’s increase under Ford is certainly lower than the increases in the vast majority of major Canadian and American municipalities. The city’s property tax rates were frozen in 2011, raised 2.5 per cent in 2012 and raised by 2 per cent in 2013.
That is indeed an increase, so tax rates are higher now than they were under Ford’s predecessor, David Miller. And Ford’s Toronto does not have the lowest increase in North America: Windsor has frozen taxes for five years; San Antonio froze them in 2011, 2012 and 2013 after reducing them in 2008, 2009 and 2010.
“We have not had a property tax increase for 21 years,” said San Antonio finance director Troy Elliott.
CREDIT RATING
FORD SAYS: “Because of our fiscal discipline, international bond rating agencies, like Moody’s and DBRS, have kept Toronto’s credit rating strong,” he said in August. In October, on the three-year anniversary of his election, he said, “I’ve taken the city, which was literally on the cliff, and brought it back.”
REALITY: Toronto was nowhere near “the cliff” under Miller. The city’s credit rating is the same under Ford now (Aa1 from Moody’s; AA from DBRS) as it was under Miller. The ratings have not changed since 2002, near the end of Mel Lastman’s tenure.
Moody’s did warn, in 2012, that “a loss of fiscal discipline leading to a significant increase in the city's debt burden could apply downward pressure on the city's rating.”
UNEMPLOYMENT RATE
FORD SAYS: The mayor has repeatedly said this fall that there has been a decline of 4 percentage points in the city’s jobless rate since he took office in December 2010, when the rate “was fluctuating around 11 per cent.” He has taken credit for the decline: “I made job creation and economic growth a key pillar of my administration. That focus has now paid off,” he said in September.
REALITY: The monthly seasonally adjusted unemployment rate was 9.4 per cent when he took office, not 11 per cent. The rate fell 2.3 percentage points to the August rate of 7.1 per cent, not the 4 percentage points Ford claims.
While it is impossible to definitively quantify the impact on the economy of Ford’s business-friendly attitude, the national unemployment rate has also fallen over the similiar period —from a national post-recession high of 8.7 per cent in August 2009 to 6.9 per cent in September of this year.
SPENDING PROBLEM
FORD SAYS: “I said from Day 1: The city has a spending problem, not a revenue problem. I have proved my statement to be correct,” he said in August.
REALITY: This claim is very questionable.
Council needed to create a new revenue tool — a Ford-endorsed special property tax levy — to pay for the Scarborough subway extension the mayor pushed for this year. Ford then had to ask Ottawa for hundreds of millions of dollars for the project. He succeeded. Ford’s signature transit proposal, a Sheppard subway extension, was defeated after he failed to come up with a plan to find the money needed to pay for it.
Ford seems to have implicitly acknowledged at other times that the city needs more cash. In 2011, Ford asked the provincial government for $153 million for specific projects and to cover half the TTC operating budget — threatening to unleash “Ford Nation” if the then-premier didn’t comply. He has repeatedly lamented the massive backlog for repairs in TCHC buildings.
ANNUAL SURPLUSES
FORD SAYS: “Before I took office, any annual surplus was used to fill holes in bloated operating budgets. Guaranteed, this will not happen while I’m mayor. We have put an end to the unsustainable budget practices of the last administration. It is over.”
REALITY: In 2013, Ford did end the practice of using surpluses from previous years to help balance the current year’s operating budget. But it is misleading to say “this will not happen while I’m mayor.” It did, twice. Ford’s 2011 budget used $346 million in surplus money; his 2012 budget used $102 million. Ford also used “unsustainable” methods to balance the 2013 budget: $47 million from reserve funds.
DEBT
FORD SAYS: “Over the next 10 years, we are reducing our city debt by over $804 million.”
REALITY: In a 2013 budget document, city officials said current plans would see the debt increase slightly over the next 10 years, not decrease: “Estimates showed that the city’s net long-term outstanding debt would increase from $2.9 billion at the end of 2012 to peak at nearly $4.2 billion in 2018, and decrease to $3 billion by 2022.” The city will now also borrow $745 million more to finance the Scarborough subway extension, a move that would nearly wipe out an $804 million reduction.
Ford has planned to slow the pace of borrowing. But as Metro’s Matt Elliott has noted, his plan assumes the city can pay for capital purchases in ways other than taking on debt. One of those ways is a vaguely defined “financing strategy” that is supposed to produce $1.2 billion through such methods as the sale of city assets.
REDUCED SPENDING
FORD SAYS: “It was unheard-of to say we’re spending less money one year than we did the previous year. It has never happened before. Folks, it is happening right before your eyes.”
REALITY: Ford can take credit for reining in spending. Claiming that spending is actually going down, though, is misleading. Follow along here.
Ford has presided over three budgets. Though he has slowed the pace of spending growth — and come close to stopping it totally — spending has increased a little bit each year, from $9.38 billion in 2011 to $9.39 billion in 2012 to $9.43 billion in 2013.
The figures above are for the budgets approved by council at the beginning of the year. Council also makes minor adjustments during the year. During 2011, the budget originally set by council at $9.38 billion grew to $9.41 billion. The budget to begin 2012, at $9.39 billion, was $20 million less than the end-of-year-2011 budget.
That $20 million reduction is the basis of Ford’s claim. The problem with the claim is spending didn’t stay reduced for long, city officials say. By the end of 2012, the adjusted budget had risen to $9.42 billion, $10 million more than the adjusted 2011 budget.
In sum: Spending shrank for a brief moment in time, but then grew again. Regardless, the initial 2013 budget was $9.43 billion, higher than the end-of-year 2012 budget. A spending decline may have been realized, but it is not “happening” now.
Finally, these numbers are for the “gross” budget, which includes all city spending, even money from other levels of government —spending that isn’t coming directly out of Toronto pockets. (Ford has argued that there is “only one taxpayer.”) The “net” budget has grown every year under Ford, from $3.58 billion in 2011 to $3.69 billion in 2012 to $3.71 billion in 2013.
Original Article
Source: thestar.com
Author: Daniel Dale
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