Wednesday, January 9, 2008

Start saving

For at least the fourth year in a row, council will have to contend with the strategic fortune of a multi-million dollar "surplus." The repeated discovery over the past decade of extra revenues at every level of government, together with the enormous political benefits that they confer upon politicians, should indicate to even the casual observer that under-reporting of anticipated revenue at budget time has become a calculated standard operating procedure of financial departments everywhere.

As noted before, the benefits to politicians include, of course, the "good news" to taxpayers that their government is managing its finances well, as though revenue from taxes and monopolistic services were a direct function of economic well-being. Politicians realize two other important benefits as well: first, fans of fiscal prudence are placated by the fact that much of the surpluses are earmarked for paying down debt without the government having to go to the trouble of making debt repayment a significant line item in the budget — meaning that surplus budgeting is a method of stealth taxation for deficit financing; and, second and perhaps more importantly, the government finds itself with plenty of extra money to throw around to coddle protected constituents.

After years of extra-inflationary tax and spending increases in London, with token remittances to taxpayers of less than ten per cent of their surplus payments to mitigate property tax increases, council this year made the welcome if still rudimentary gesture of earmarking at least 12.5 per cent of this year's surplus for the purpose. Even the London Chamber of Commerce is adopting an apparently populist stance this year, proposing to council that it set aside 20 per cent of the surplus for tax reduction.

"Let's remember who put this money there," said Gerry Macartney, the chamber's general manager. "A fairy didn't drop it down on city hall. It came from you and I, the taxpayers."
This might be a reasonable suggestion had the Chamber had also recommended using the rest for reduction of the city's almost $400 million debt, but instead it suggests using only a modest 40 per cent for that purpose, leaving still another 40 per cent for the typical spending splurges at budget time that have fostered dependence on tax increases by London's community groups. But this is, of course, the same Chamber of Commerce that reported it would be content with a three per cent property tax increase, following 2.5, 3.9, 5.9 and 6.6 per cent hikes in the preceding years. Who needs politicians when business spokesmen are acceding to such moderation?

In the local grapevine is a rumour that veteran NDPer Controller Gina Barber will be coming out shortly for taxpayers against tax increases in London. This would be a welcome acknowledgement by a socialist of the punitive burdens of property tax hikes on the city's lowest-income earners, against the meagre benefits of council's various wealth redistribution programs. But one must wonder which of the city's massive social spending programs she is willing to cut to achieve that goal — this is, after all, the same woman who approved the Library's request for a 6.4 per cent budget increase.

11 comments:

NIAC said...

Every time I hear "surplus" coming from an entity that is forever complaining not only about lack of funding but also about the overspending it does, I am reminded of this teaser:

Three men walk into a hotel late at night, exhausted, looking for a place to sleep. They approach the desk, and when they inquire, the manager states that there is only one room left, with two beds, but they can wheel a cot into the room so all three can sleep in there. It would also cost $30.00. Each of the three men pay $10.00, and proceed to the room.

The concierge comes to pick up the bags, at which time the manager is re-thinking his pricing. "I can't charge full price for a cot, I am going to charge half price", he explains to the concierge. "Here, give the three $5.00 back."

On his way to the room, the concierge considers the math. "I can't divide five dollars easily for three people!" He then decides to pocket two dollars, and give each of the men one dollar back, and explains the refund to the men as he gives them each a dollar back.

Now, since each man paid $10.00, and got a dollar back ... 3 X $9.00 = $27.00. The concierge pocketed $2.00. $27.00 + $2.00 = $29.00.

Where's the other dollar? (wow...we have a surplus!)

Elaine said...

I don't believe there is a surplus. I believe they are saying there is one so they can justify some right after the budget screwball taxpayer waste of money.

Cooking books is second nature to councils who like to spend, spend, spend. The city needs a good old fashioned audit done by someone who has nothing to gain by cooking the books some more for them.

MapMaster said...

There is never a surplus, at least as far as city hall can regard it as its own. Every dollar represents overpayment by taxpayers of the city's budgeted requirements, so in fact it should not be theirs to decide with what to do in the first place.

eng said...

Every dollar represents overpayment by taxpayers of the city's budgeted requirements, so in fact it should not be theirs to decide with what to do in the first place.

Hahaha!

Is "overpayment" the latest commie euphemism for "profit"?

You did a very good job, making this site look just like the "london fog", but you just gave yourself away, pinko!

The city government is a business. It made a profit. Where's the problem?

Would you prefer the city run deficits? Next you'll want closed borders and artificial currency pegs so you can siphon off money to finance your communist dreams!

mariposa said...

Only a true commie would see tax dollars as a "profit".

mariposa said...

The city government is a business.

Really? If it truly were a business that was being run to make a profit, there would have been a lot of dead weight cut and a lot of jobs outsourced (garbage pickup for one) a long time ago.

And if we (the taxpayers) were truly considered to be the "shareholders", the "board of directors" would have been replaced years ago with more fiscally responsible people.

Mike said...

The member tilts his head at Premington/eng and asks, slowly, deliberately, "You... you don't know what words mean, do you?"

- Mr. Show

eng said...

Only a true commie would see tax dollars as a "profit".
I don't know any communists, just people who lived under it. As I see it, communists don't really understand taxation. The State receives all income, then pays its employees. They don't show "deductions" or anything, you only get your stipend. So they don't actually "tax", they just keep most of the money.

Really? If it truly were a business that was being run to make a profit, there would have been a lot of dead weight cut and a lot of jobs outsourced (garbage pickup for one) a long time ago.
Some businesses do that. Not all. If you follow these things, there was the outsourcing fad, then the insourcing fad, then outsourcing again. Each has its own problems, which is why the popularity varies.

Different ways of doing things is why we have businesses, operating independently, instead of as departments of the government.

And if we (the taxpayers) were truly considered to be the "shareholders", the "board of directors" would have been replaced years ago with more fiscally responsible people.
Democracy sucks sometimes, doesn't it? Get more supporters and change the government.

Mr. Show
I had to google to find what 'Mr. Show' was. I'd never heard of it. Probably because it was available through HBO, a US satellite broadcaster. It would be illegal for me to steal those transmissions here.

mariposa said...

Thanks to eng and the other London boneheads who simply vote name recognition we can expect the same lunatics to continue running the asylum.

Anonymous said...

Mapmaster, can you or someone else explain how the city can use some portion of the tax surplus to pay down debt. I mean, what would they do? - walk into a bank and put something down on this $400 million like you or I would on a line of credit.

MapMaster said...

I'm afraid I don't know the mechanics of municipal debt payments — perhaps there's a magic button somewhere in City Hall that they can press.

Incidentally, did you know that London paid about $50 million last year on debt servicing and reduction? That's well over five per cent of the overall budget, and roughly $150 for every man, woman and child in town. As for the debt, it remains about the same, around $350 million.