Zero Is Not A Vision
I dislike paying property taxes as much as anyone else. I want the lowest possible tax increase. I want value for tax dollars and efficient and effective service delivery reflected through good fiscal policy. I also want to live in a city that is a vibrant regional hub, unique in urban design, environmentally conscious, progressive in innovation and cutting edge research, with centres of excellence, and low unemployment. When I examine the proposed cuts needed to achieve a 0% tax increase it does not reflect a vision for London’s future. Zero is not a vision.
The Facts: Important to Understand What Can & Can’t Be Cut
The former GM of Finance for the city succinctly bundled the services offered by the city into three categories to help Councillors discern their ability to control costs. The three categories include:
Category 1: Programs mandated by the province which includes Ontario Works, social housing, and associated social programs, Conservation Authorities, Middlesex London Health Unit. We have little to no flexibility in reducing these budgets. In addition, this bundle includes Boards and Commissions which have independent autonomy as confirmed through by-laws. Again, council’s ability to mandate substantial budget changes is very limited.
Category 2: Protective Services: Police, Fire and Ambulance. By provincial regulation, council is not able to direct the Police Services with respect to any aspect of policing. Once the Police Services Board has approved the police budget, council can alter the total amount requested and the police can appeal to the Ontario Civilian Commission on Police Services. The majority of the police budget is personnel. Reducing staff is the only way to achieve savings and council has not shown an interest in doing so. Similar comments can be made for fire and ambulance.
Category 3: City Hall Services. This is the category that directly affects programs to business and residents. The bundle includes garbage, recycling, road repair and maintenance, urban forestry, finance, legal, planning and development, parks, recreation and culture. Over the past five years we have cut $24 Million out of city hall. It has included salary freezes, reorganization, reduction in the work force and efficiencies. There is very little low hanging fruit remaining.
The Category 1 mandated programs, Boards & Commissions budget is approximately $107 Million, Category 2 Protective Services budget is approximately $144 Million and Category 3 budget which includes services council has direct control over is approximately $130 Million.
- Almost two thirds of the budget is mandated, or includes services that council has little to no control over.
- Over $300 million of the budget is attributed to contractual agreements. A 2% increase in salaries, wages and benefits equates to $6 million increase in property taxes, or approximately 1.4% tax increase.
- The Ontario Works caseload is anticipated to remain at a high level given the uncertain economic factors.
- The Ontario Municipal Employees Retirement System (OMERS) sponsor corporation identified a rate contribution increase that equates to .9% tax increase for 2013.
- Utility costs are anticipated to rise 10 – 14% over the next 5 years.
- The roads and transportation division have identified that road and infrastructure repair is falling behind by $5-6 million per year. This does not take into account any plan to tackle the $300 Million dollar infrastructure deficit. It is not anticipated that senior levels of government will assist with a substantial influx of tax dollars.
- Emerald Ash Borer is devastating the urban tree canopy. Approximately 10,000 ash trees in declining health are on city boulevards. The removal and replacement will require an additional $1 million to the base budget each year.
- The Mayor wants to establish an economic levy which will be used for new capital projects. How this will be funded is not known but may include a tax increase.
- Diverting or using Reserve funds to achieve a 0% tax increase simply defers costs. It is short term financial gain with long term implications, usually felt after the next election.
So how do you get to 0% tax increase?
It can’t be done through efficiencies alone. $25.6 Million must be reduced from the budget to get to 0. Remember, the challenges noted above with our limited ability, and in some cases inability to cut mandatory programs, protective services, Boards and Commission. No matter what anyone tells you, it will require deep service cuts.
Questions for Councillors’
What services do you want to cut? To get to 0 means laying off 73 police officers, closing or cutting library hours, reduced recreation programming, reduced operations of swimming pools and community centres, a reduction in London Transit Service, grass cutting on boulevards, sidewalk snow removal etc. For full report: http://bit.ly/MKGC3e Appendix A.
What is their plan? If you are told it will be easy to find $25.6 Million ask for the financial plan. No one on council has provided a financial roadmap to 0. Some have confused basic budgeting principles.
Ask if they plan on raiding/diverting funds from Reserves? If they say yes you should refer them to the Chamber of Commerce letter: item 2b http://bit.ly/MKGC3e . Ask them how the Reserve funds affects our Triple A credit rating.
If they point to a municipality in another province as the financial model, you can remind them that only Ontario municipalities have been downloaded social programs.
What is their vision for London
A recent staff report noted London taxes are ranked as the lowest to third lowest in the province across all categories; residential, industrial and commercial. The Chamber of Commerce recommends: “ tax growth rates should not exceed the combination of inflation plus an allowance for population growth” http://bit.ly/MKGC3e . Council needs to hear your feedback. If you want 0% tax increase, what services do you want cut? (Go to the listed items noted in Agenda item 2, Appendix A, second pdf file on right hand http://bit.ly/MKGC3e). If you are concerned about the drive to a 0% tax increase what do you recommend? Does the strategic vision drive the budget or is 0 the vision, because that is what you will get.