Thursday, December 9, 2004

City Hall’s Cynical Budget Politics

Thank you to Kim Ainslie for allowing us to reproduce this article, which first appeared in Scene Magazine (No. 480 - November 25, 2004). Dr. Ainslie is President of Nordex Research in London, a private, public policy and market development research organization serving clients across North America.

City Hall’s Cynical Budget Politics

We live in a cynical world and city hall is practising some pretty cynical budget politics.

It is astonishing the lengths that budget chief, Tom Gosnell, and chief administrator, Jeff Fielding, are prepared to go to undermine public confidence in the annual budget process, and thus further alienate an already sceptical electorate.

First, they are seeking to raise taxes on London property taxpayers by 11% in 2005, when city council has passed a resolution stipulating that the budget increase should be limited 3%. Indeed, five members of council recently found the cynicism so galling that they voted to turn the budget back to Gosnell and Fielding to reduce the tax load to 3%.

Councillor Paul Van Meerbergen led the charge on this act of sanity. He is worried that there will be a 25% increase in household property taxation for the three years of 2004 to 2006, inclusive.

To rationalize his defiance on the budget, Gosnell again trotted out the familiar “provincial downloading” excuse. But this excuse is getting way too old, since it is now well recognized by municipal finance officials that downloaded expenses in London are less than one-tenth of the annual revenues coming from the Province, in the form of conditional grants and subsidies. Fully 20% of revenues in the 2005 budget comes from the provincial government, that’s $113 million. In addition, the Province and the federal government are sending along an additional $13.5 for capital spending.

Gosnell failed to lend any credibility on his budget about-face by holding a secret briefing session with the news media on the morning of the budget release. Well before the budget was officially delivered to the public, Gosnell, Fielding, and the city’s top bureaucrats held behind-closed-doors meetings with the Free Press and others, and thus were able to put their controlled, partisan spin on the 11% increase. Again, other members of council objected vociferously to this attempt at manipulating the news environment.

Worse, that night, November 10th, Fielding arranged for a taxpayer-funded dinner with local, wannabe elites, many of whom have been recipients of city hall grants and subsidies, in order to co-opt them in putting a positive spin on the 11% budget. As if on cue, the next day, John Kime, the head of the city’s economic development agency and a big recipient of city funding, was on the radio telling all who would listen that the 11% increase was entirely reasonable.

Fielding made a lot of noise in the budget announcement about the city “getting its fiscal house in order.” Translation: we need more money to pay the annual “debt service” (interest payments on the city’s debt), which now reaches about $34 million per year. That approach by itself seemed reasonable, except that the 2005 budget has $103.2 million dollars in brand new capital spending (the equivalent of more than 10% points in property taxes). Even accounting for the current commitments to sunk capital costs, there is $61 million in capital spending in the 2005 budget never previously contemplated, and much of this spending will rely on new borrowing -- which just digs the debt hole deeper. Far from getting our fiscal house in order, this budget makes our fiscal situation worse.

The cynicism starts to go over the top when we realize that the city is expected to receive $4 million from the provincial gas tax ($9 million in future years) from which the London Transit Commission – that big, fat, bloated extravagance – has already planned to purchase additional buses, many of which already travel unoccupied in the suburbs most days and evenings. Moreover, the province recently announced that the police department is to receive a 50 per cent subsidy for the hiring of on-street police officers in 2005. Apparently, only six of the 35 officers financed last year by taxpayers went to on-street duties. And, the police chief is planning a major re-construction of police headquarters to the tune of $6 million -- presumably to accommodate his top-heavy administrative staff.

Here are some other outrages. London taxpayers will subsidize the operations of the LTC up to $17 million this year; $14 million will go to subsidize public libraries; $1.6 million is slated for the London Economic Development Corporation; $1.5 million for Tourism London; $1.3 million for Museum London, and over $650,000 is going to the Convention Centre.

Londoners need to respond with anger to this cynical ploy for more money. Call Gosnell and Fielding and give them an earful.

Story by Kimble Ainslie
Originally published in Scene Magazine, No. 480 - November 25, 2004