Toronto Board of Trade

Toronto Board of Trade

November 06, 2006 12:00 ET

How Will You Deal With The $518 Million Budget Gap?

Toronto Board of Trade issues open letter to municipal candidates

Attention: Business/Financial Editor, City Editor, News Editor, Government/Political Affairs Editor TORONTO, ONTARIO, MUNICIPAL ELECTION--(CCNMatthews - Nov. 6, 2006) - The Toronto Board of Trade is challenging all candidates for municipal office in the city to tell voters how they would deal with a $518 million 2007 budget shortfall identified by city staff.

In an open letter, the Board points out that the next Mayor and City Council will have to find more than half a billion dollars in new revenues, spending cuts or both for next spring's budget, and invites candidates to address this key issue in the last days of the election campaign.

"Now, during the election campaign, is the right time to tell voters how you would deal with the budget gap in the short term and the city's finances in the long term," says the letter from Grant Humes, COO & Acting President of the Board of Trade, noting that the issue has received little attention during the campaign.

The letter (sent to all candidates and available at www.bot.com) also explains that downloading of provincial costs on to the city are only part of the problem - Toronto must also face up to the fact that it is on an unsustainable fiscal path. The cost of many city services unaffected by downloading are growing faster than the cost of living and debt service costs have been growing 30 percent faster than the city's GDP over the last nine years.

The $518 million figure was calculated by city staff in their 2006 Budget Summary as the amount of extra revenue or savings needed to balance the 2007 city budget with zero percent growth (see attached backgrounder).

The Toronto Board of Trade is the champion of a competitive and vibrant Toronto with a mandate to serve, represent and unite the city's business community. Founded in 1845, Canada's largest chamber of commerce operates at four locations across Toronto. Further information about Board events, policies, advocacy and products is available on its website at www.bot.com. Commentary from Board executives can be found on the Board Blog at www.bot.com/blog.

BACKGROUNDER

Excerpts from the City of Toronto's 2005 Financial Annual Report & 2006 Budget Summary

"…the 2007 Operating Budget will increase by $519.7 million, resulting in a Net Operating Budget forecast of $3.652 billion. For the most part, the increase is attributed to City one-time revenues of $273.0 million utilized to balance the 2006 Operating Budget…Other significant reasons for the increase include inflation (including cost of living adjustments), annualization costs, debt service costs, etc. that total $231.7 million.

The 2007 Operating Budget Target is set at 0 percent change over the Council Approved Net Expenditure budget of $3.132 billion… budget reductions of about $518 million would be necessary to achieve a 0 percent target in 2007. This will be a significant challenge which cannot be achieved only through austerity measures. It is, therefore, urgent that the City continue to work to achieve further operating efficiencies while pursuing sustainable revenue solutions with the Province." (P.153, Volume 4: 2006 Budget Overview & Program Summaries)

Key recommendations from the Toronto Board of Trade's 2006 municipal pre-budget submission include many ideas for reducing costs and increasing revenue:

-- Negotiate the transfer of funding responsibility for social assistance, housing, and half of the public transit operating subsidy to the government of Ontario (potential budget impact: $299 million)

-- Adopt a user fee policy that ensures a higher level of cost recovery, more effective demand management and greater fairness (potential budget impact: $300 million)

-- Review service enhancements approved since 2003 to verify priority, effectiveness and value (potential budget impact: $135 million)

-- Implement the recommendations of the Auditor General that have not been acted upon and recover all outstanding amounts owed to the city (potential budget impact: AG has identified $30 million in misspent funds or uncollected revenue)

-- Open the door to alternative service delivery methods such as partnering, competitive bidding (including bids from municipal departments and city staff) and divestiture (potential budget impact, e.g., city report says $20 million a year is being saved through private garbage collection in Etobicoke and York)

-- Grow the tax base by reducing business tax rates and publish an annual report card of economic performance indicators to measure progress in enhancing the business climate (Toronto has lost 100,000 jobs and 10,000 businesses since 1989, deflating the property tax base. Competitive taxes would attract and retain employers, increasing city revenues.)

- 30 - /For further information: www.bot.com/media/ IN: ECONOMY, FINANCE, POLITICS

Contact Information

  • Glen Stone, Public Affairs Manager, Toronto Board of Trade
    Primary Phone: 416-862-4565
    E-mail: gstone@bot.com