Wednesday, February 21, 2007

Budget 2007 meets the new council…
same as the old council

The London Free Press reports that council last night approved a 2007 budget that raises residential property taxes by 2.51 per cent this year. After increases of 3.9, 5.9 and 6.6 per cent in the three preceding years, this year's hike may appear to be a relief — but such are the reduced expectations of Londoners. Property taxes get the big press, but Londoners will also be paying 5 and 11 per cent increases in sewer and water rates respectively. The average homeowner in London will still be on the hook for an additional $55 in property taxes and $48 in sewer and water charges.

As it turns out, London's new council is just as committed to the tax and spending regime of the past decade as the old council, an unsurprising result in a 19-member chamber that features only four new faces, only two of whom actually unseated incumbents. Elections, it would seem, represent more profitable opportunities to politicians than to taxpayers. As the only councillor who voted against the budget, Paul Van Meerbergen notes properly that this year has been only another wasted chance in a long series of unfortunate councils:

"We've seen taxes increase 31 per cent, not including this year, since 2000 and that outstrips any wage increases and the ability of hard-working homeowners to keep up," Van Meerbergen said. "We had a chance (to cut taxes), we had a choice and we didn't get the job done."
London's politicians have long ago lost any pretense of control over the spending that has caused not only a 31 per cent increase in residential property taxes but also an almost 60 per cent increase in water and sewer charges over that same time, and a municipal debt that climbed to $371.1 million in 2006, the last year in which it was reported. The 2007 budget itself calls for $890 million in spending, which represents over $2500 per man, woman and child in London, or much more per actual taxpayer. The total tax bill for a home valued at $173,000 will rise to $3,335 this year, including charges, although taxes and fees paid by commercial properties will also be passed on to consumers.

The city rationalizes its spending woes by saying that the city's "'basket of goods' is different from the 'basket' used in calculating the general inflation rate" — a pretext that can be used without any effort again and again because it is essentially meaningless. Unlike consumers, the city actually controls the prices of many of the goods in its "basket" but has shown little inclination to contain its price increases; city departments are not called on to justify their budgets but only the increases contained in generous targets that are themselves well above the rate of inflation, and this only in a desultory and relenting fashion by council. But the bigger problem is simply the city keeps putting more goods in its basket. Most of the $890 million is entirely discretionary spending by the city, and despite politician's protestations about downloaded costs to the contrary, the city actually does have express legislated control over most spending in the budgets of "regulated programs" — it chooses either not to exercise its control or to maintain its impotent pretences. In other cases, what the city presents as regulated obligations are strictly a fiction.

Sona Ghosh protests for cashAs an example, one of the "triumphs" of tax and spend advocates like Coun. Susan Eagle at city hall last night was the council's last-minute decision to add $2 million in spending for social housing. As a recent Free Press article noted, London already operates 8000 social housing units, "more housing than found in all of Goderich," a staggering number already for a city of 340,000 that amounts to a small city within its midst. At some point, enough should have seemed to have been enough — social housing has been one of the most egregious offenders in London's fiscal decline. Municipal funding of the operating costs of the London Middlesex Housing Corp. that operates London's stock of social housing increased over 88 per cent between 2003 and 2007, from $2.6 million to $4.9 million. Capital expenditures on social housing also amounted to over $5.2 million last year, and at least as much again this year. Although the Housing Corp. is considered by council to be a regulated program, council has the authority under the Social Housing Reform Act of 2000 to "amend, delete or add to any of the accountability rules" set out under regulations, allowing it "to add a rule or rules which would provide express control over the budget." Now would apparently be a very good time to start. Nevertheless, the city washes its hands of oversight on public housing and uses it instead as a stump for populist grandstanding and expansion of its control over the local economy, even allowing its staff to indulge in gross and misleading political characterizations. From the city's own budget documents:
We need to remind ourselves that we are in the business of providing "safe and affordable housing" as mandated by the Social Housing Reform Act.
In addition to everything else, Londoners are receiving a poor return on their investment in bureaucrats, because the Social Housing Reform Act does not mandate at all the provision of "safe and affordable housing;" it relates only some of the responsibilities of municipalities in the conduct and operation of their extant social housing stocks and the powers it may register in relation to them. No legislation compels London to acquire, improve or expand its social housing, despite the city's officious sentiments. But bureaucrats are not to be expected to recognize real returns on investment. The same document attempts to rationalize spending increases:
The return on investment is happier, healthier tenants and community… The real return on the investment would really be "PEACE OF MIND"
Deceit and fraudulent intent are apparently not the only goods that come from city hall. Such astonishing drivel and pandering preciousness barely belong in a Free Press editorial — they most emphatically do not belong anywhere in an administrative document that has otherwise serious ramifications to taxpayers.

1 Comment:

Jake said...

"Happier, healthier tenants and community"--yeah right. Even if you made every social housing unit in London a luxury palace, they would all turn back into gang-bang ghettos in a matter of weeks.

When people receive handouts, they don't appreciate it because of a false sense of entitlement. Contrary to left-wing activists, social housing isn't suppose to be a "permanent fix" for people since it creates dependency on the state. If you let people rely on the government for all of their needs, there is little incentive for people to want to change their situation.