Thursday, April 14, 2005

Tilting at the windfalls

London's $13.1 million "windfall" from the province will be spent on debt reduction if council accepts the Board of Control's recommendations, the London Free Press reports. Tom Gosnell was the only member of the board who proposed using some of the money for relief for taxpayers facing a 5.3% increase in property taxes this year, on the heels of last year's 5.9% increase. While this dashes the hopes of Londoners for a reduced property tax hike, it would also dash the plans of councillors who can't see a dollar bill, in their hands or anyone else's, without trying to push more ruinous economics. Guess who…

Coun. Susan Eagle said she doesn't want to see the budget reopened, but does want to see some money spent. "There are some areas where there is significant need, especially in social and environmental programs and if we can put some money into those areas now, down the road we'll save money," Eagle said.
Gosnell's proposal would be reasonable, as continuing tax increases dampen London's economic expectations and future ability to pay for debt, not to mention taxpayer morale. However, our municipal debt at the end of 2004 stood at $335.4 million — roughly $1000 for every man, woman and child — so debt reduction in itself is certainly not a bad thing at all.

Council currently has a $30 million debt cap in place for each year's budget — this means that they can add $30 million in debt each budget above and beyond any debt retirement made. For example, last year the city incurred $69 million in new debt after retiring $29.8 million. This is alarming enough in it's own right, but what the Free Press does not tell us is whether the $13.1 million debt retirement would be applied against the most recent budget's finances or this year's — if this year's, would that give council an extra $13.1 million to wriggle under their $30 million debt cap for the next budget? Pay the credit card off this month and max it next month? Either way, there are members of this council who will take this one-time debt reduction as a license to spend more money. Council must begin to seriously reduce spending — we can barely afford our municipal government as it is. The $13.1 million came from the Ontario Municipal Partnership Fund and every municipal government received money from this fund — which means, that Londoners are also paying provincial taxes to provide "windfalls" for other municipalities in a giant public relations game — governments passing around appropriated taxes to other governments so that both beneficiaries and benefactors look good. So we Londoners are already paying for this municipal "windfall."

London's rosy future