Thursday, May 10, 2007

Start saving…

…the next London property tax hike is only ten months away. City staff are forecasting another 4.5 per cent increase in spending next year, requiring another three per cent hike in property taxes to pay for it after an anticipated 1.5 per cent tax assessment growth. Spending and tax increases well above the rate of inflation have become the norm here over the past five years or so, but so too has spending eventually exceeded the preliminary forecasts in that time. Politicians are already sounding the alarm.

Board of control yesterday asked staff for a review of the $30-million debt cap on spending on hard services and the impact any increase would have on taxpayers.
If that's what we're paying staff for, there's one expense that can be avoided. The impact on taxpayers would quite simply be yet higher taxes. The cost of paying London's debt, now over $300 million, topped $38 million in 2004 alone, which made up 5.6 per cent of the city’s overall budget. Council instituted the cap on new debt four years ago after the an all-out spree of deficit-financed feel-good capital projects — the John Labatt Centre, the Central Library relocation and expansion, Covent Garden Market and the Convention Centre — caused the debt to spiral out of control. The deferred spending is coming back to haunt London, as ordinary capital investment in road and sewer infrastructure has been curtailed under the debt cap regime to the point that a massive renewal of investment will soon be required, a condition exacerbated by council's continued use of the capital budget to fund unnecessary and frivolous projects. The much-ballyhooed "infrastructure gap" that municipal politicians use to extort tax dollars from senior levels of government is a product of their own financial mismanagement. Capital investment in infrastructure is now unquestionably a priority, but unless council manages to severely rein in its operating spending, total spending and taxes will continue to rise extravagantly in London.

Among the other things we've come to expect each year, however, are last minute multi-million tax dollar handouts from the federal and provincial governments that allow council to maintain its projected spending while shaving a few decimal points off of the municipal tax hike. Another is the "discovery" of millions of dollars in surplus tax revenue from the previous fiscal year, giving council the green light to to dispense extra token cash favours to various civic groups, thereby exceeding even the spending projected at the beginning of the budget process. These massive budget "surpluses" are becoming an expedient custom at City Hall.

Despite the good game talked up by councillors each year about financial responsibility, these are substantially the same people who have been representing us for the past six years of extravagant spending and tax increases. I'll take the current hand-wringing with a grain of salt… especially considering that board of control has also instructed staff to "explore the issue" of increasing councillors' $5400 travel allowances to permit them to attend more conferences.
And it's not about putting money aside for "boon-doggling" said Controller Gord Hume, who raised the issue.

"Some people are going to say this is just a boondoggle, but we're a big city with a billion-dollar budget trying to be creative and bring new ideas into the city," he said.

"I think, at the end of the day, most people are concerned about value. If someone goes to a conference in the United States and comes back with an idea or innovation that saves us $500,000, that's pretty good value.
Exactly wrong, Mr. Hume. Conferences are boondoggles. Anything councillors want to learn they can learn from conference proceedings or email — actual attendance is just an excuse to junket. Besides, it's the staff in London that make all the analyses and decisions, except to add even more spending.


Jake said...

Just look at the $2 million "spending orgy" that council approved a few months back. We could have used that money to reduce taxes or fix the roads. Now we can barely afford to widen 1km of Western Road without having to blackmail UWO about some obsolete contract they signed 16 years ago. That project is just the tip of the iceberg when it comes to infrastructure investment.

Most of the road and sewer projects in this city have to be subsidized by upper levels of government or another third party. The only reason the city was able to repave some of our crumbling roads last year was due to a one-time grant from Queen's Park.

The recent road widening of Airport, Oxford, Springbank, and Commissioners Roads were due to a three level capital grant from both provincial and federal governments. We keep splitting road widening into phases that take decades to complete (Oxford and Commissioners Roads won't be completed till 2015).

We are at the point in this city that we will have to spend a minimum of $100 million in ten years to expand roads that could have been completed far cheaper if they were done sooner. If we spent the money used to build the JLC, Libraries, and market on roads and infrastructure, this would have led to a massive influx of new investment by private business in new economic development.

The logic is simple: build good, well planned infrastructure, and the spinoffs pay for themselves. Look at Kitchener and Mississauga with all of the new industry being built there because they have modern, efficient roads and infrastructure that has led to a boom.

Unless we get our house in order soon, London will keep lagging behind other cities and keep having our roads mentioned on the Worst Roads Poll.

Anonymous said...

One place the City can start saving dough is to start paying its management-friendly CUPE Local 107 union boss as per its collective agreement, immediately if not sooner!

They should also disgorge the improper $44,309.00 that he received during the past 30 months, over and above his proper pay.

But guess what? They've all been sent the story (on city council), but not one of them acknowledges it.

Methinks that it's a case of See No Evil, Hear No Evil and Speak No Evil!

Pump up the Volume, Pump up the Volume, Wah Wah Wah!