Economics and Finance
Underlying any discussion of a vision for Toronto’s future is bringing long-term fiscal stability to the City. Since amalgamation a decade ago, the City has struggled to match the demands for services to available revenue streams. Toronto’s first Mayor, Mel Lastman, froze property taxes for the first years after amalgamation; the province further downloaded responsibilities for a number of services to Toronto, without appropriate financing. Since then it has been a struggle to bring revenues up to par. Two new revenue streams introduced by Council, the Land Transfer Tax and Vehicle Registration Fee have helped, but Toronto remains the country’s fifth-largest government with ostensibly the same tax structure as a city one tenth the size. What kinds of taxation powers are appropriate for the City of Toronto, and at what level? In terms of property taxes, what is the appropriate balance between residential and commercial property tax payers? What efficiencies can be gained that will not negatively effect service delivery?
Taxes are only a piece of this discussion, though. There is much work to do to insure that the City is competitive into the future. How do we build an economy that takes advantage of the City’s creativity and strong culture sector? How do we build a “green economy” for the future? How do we compete against and collaborate with surrounding municipalities? How do we ensure fairness and equity in our economy, protect workers and ensure that Toronto is an affordable and attractive place to live for all? As noted in the introduction, I will create new threads for discussion as they are needed.
November 17, 2009 at 12:29 pm |
One of the mistakes I always see this city make is in trying to ‘improve the bottom line’, meaning that it is run like a business that seeks profit or a healthy economic return on investment. What is missed is that this is a government that has a societal responsibility to improve the quality of life of its citizens; not always measured in dollars. Here’s an example: Toronto libraries are toying with switching to automated cheout of books. Societal effect? Further isolating human contact between citizens. Banks do this with ATM’s to maximize profits. Cities are not banks and should have different values.
November 17, 2009 at 1:22 pm |
Ken,
The city must improve it’s bottom line because it’s in debt. A lot of debt. If the city goes bankrupt, there wont be any money for quality of life improvements. Frankly having libraries with automated checkouts is fine, there are always librarians on hand to interact with. We should be looking hard at where we can cut overhead (i.e. TTC ticket takers making 50k/year)because it’s not the provinces responsibility to bail us out when we overspend. Yes we get short changed by the province, but that’s not going to change anytime soon, so we need to suck it up and get our financial house in order before paying for any more pet projects.
November 17, 2009 at 1:30 pm |
Ken, I disagree. Where greater efficiency in the delivery of a service can be found (without undermining that service) should be explored. If public libraries can provide the same level of service with 20% of the staff/cost then that should be explored because that funding can be better used somewhere else, even within the library system: to buy new books or create additional programs (esl or extended education programs).
I think there are far superior ways to create positive interaction between people. Checking out my books at the library isn’t exactly a social process (at least for me). But taking a class on haiku poetry at my local library would create a much more social and rich experience.
November 20, 2009 at 12:23 am |
Agree with Sean
The city should entertain instituting international standard for continual improvement in provision of services audited by certified outside experts. What is better, a trained Librarian acting as a cashier or talking to a child looking for a book.
November 20, 2009 at 10:11 pm |
I think you both miss my point. Yes,” librarians talking to a child looking for a book” is a good thing as is “taking a class on haiku poetry”, but maintaining a human contact point for people to people interaction on a regular basis are not mutually exclusive choices. I can understand that younger people who have been programmed and are comfortable relating to other human beings via twitter, texting etc may not get this. But us older people (and there will be a big blip of older boomers) feel more included in society when we can talk to a person rather than touch a screen. Inclusion is an important thing.
November 17, 2009 at 2:32 pm |
The city must lower commercial property taxes. The “Enhancing Toronto’s Business Climate” program does not go far enough for small commercial properties. Once the cap protection has expired, many (most) small businesses will find it impossible to remain in Toronto. Dukes Cycle will never return to its old location. Even with the end point rates (2.5x residential, with the education portion being 7x) the rates are far to high. Kensignton Market, Ossington, The Beach, will all be ravaged by high taxes just as Dukes.
The city did no due diligence to see what levels of taxation could be supported.
November 17, 2009 at 3:27 pm |
Talk of specific tax proposals is now on the “Taxes” page.
November 17, 2009 at 5:43 pm |
As to new or enhanced revenue; first is making sure we stop charging less than fair market value for publicly owned or controlled parking.
On-Street parking rates in Toronto are well below those charged in Calgary and Vancouver ($3.50 per hour here, vs. $5.00 per hour there); Chicago is set to raise on-street parking rates to $6.50 per hour by 2013)
Residential parking permits are similarly under priced at only $143.00 per year for a first car. That’s less than .50c per day! The market value of that space is at least 10x that in most parts of the City. If you buy a condo now, you expect to pay $20,000 per parking space (or $1,000 per year if you amortize over 20 years) Rates for permits need to at least double.
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Where taxes should decline is multi-use residential (with the requirement that all or most of the savings be passed on to tenants in the form of a pro-rata rent reduction.
If apartments were taxed at the same rate as single-family homes it would reduce an average tenant’s rent by as much as $100.00 per month or more; that would go some distance to easing affordable housing concerns.
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Tolls should be considered on municipal highways but this should clearly be linked to at least some reduction in property tax to make it more palatable and to an improvement in transit service, since obviously we would hope a toll would cause some people to switch modes of transportation, we’d better have room for them.
November 18, 2009 at 12:02 am |
There needs to be a fundamental restructuring of municipal financing in this province. The idea that capital expenditures should be financed from recurrent revenue should be trashed and a municipal bond financing facility put in place to finance infrastructure and other capital expenditures.
The City should be entitled to issue debt subject to strict financial performance criteria, and there would need to be a technical oversight arrangement beyond the control of politicians to ascertain that the selection and implementation of capital projects are based on solid economic analysis and rigorous procurement transparency.
Revenue raising for recurrent expenditure needs to be diversified from property tax, which is a regressive form of taxation, and more related to taxpayers’ recurrent cash flow. A municipal income tax would be one approach.
Services such as garbage collection should be privatized as soon as possible, and the right to strike for all public servants should be revoked and replaced with binding arbitration of disputes.
There also needs to be a technical oversight committee removed from politicians to continuously vet municipal operations for waste, corruption and nepotism, and rout it out wherever it is found. The implementation of such processes should begin with a thorough review of employment levels, hiring procedures, incentives, discpline and financial management in the Toronto public service, to be followed with a compulsory implementation process so that such reports do not just gather dust.
To implement any of these proposals, we need a Mayor – and council – with guts to face down vested interests, confront mediocrity and who understands the fundamentals of public finance and administration on a wide scale, and who has an established and respectable track record in these areas. Given G. Smitherman’s lack of formal and practical qualificaton in areas of public administration and finance, and the lack of any improvement whatsoever during his tenure as Minister for Health in Ontario, he is particularly ill-equipped to manage the multi-billion dollar financial re-structuring and financial management challenges facing this city. Torontonians should put their emotions aside this time and look for hard qualifications and experience in chosing its leadership.
November 20, 2009 at 12:48 am |
There needs be 3 core policy principles;
The City should be only minimally involved in employing anyone but those necessary for managing core service delivery. i.e. garbage collection is a private sector service to be managed by City.
City employees’ wages and benefits must reflect the standards of the taxpayers who pay them. If the standard across the City is 9 sick days a year then that is what City employees are entitled to; if there is average of 1% wage increase in the City then that is what City employees get. We need to stop the system where the public is more and more alienated from the Public Service by the fact that the public knows that the servants are getting a better deal than they are.
Job security provisions i.e. jobs for life must go. Sending the message to an employee whether private or public sector that they are virtually guaranteed a job for life regardless of their conduct and performance is the single biggest cause of waste and inefficiency in any organization. It creates a ethical downward spiral in responsibilty and accountability on the part of the entire institution and is endemic in the bureaucracy of the City of Toronto.
November 18, 2009 at 10:07 am |
Please Stop bleeding us! At this rate of increases, only your high class income families will be able to afford living in the city…or is that their goal?
November 20, 2009 at 10:13 pm |
So what is your suggestion to gain revenues needed to run the city now?
So far, all you say is ‘don’t make me pay’. Where should the money come from then?
November 19, 2009 at 11:03 pm |
Listening to Janet Ecker today that Toronto is the banking hub of the country and noticing in the news that the big 5 all had profits in this last disastrous year makes me wonder – perhaps they’d like to trickle some of that that profit down to the city. How about the TD LRT Airport Express? The BMO central rail? The Scotia Bank Transit plaza?