Thursday, November 24, 2005

Melba Toast

Arguments that using London's $8.7 million budget "surplus" for debt reduction will help lower taxes in the long term by reducing interest charges are predicated on the assumption that city hall will suddenly begin practicing fiscal restraint and refrain from incurring new debt. Is there any reason to believe this will start happening now?

The London Free Press reports that

[a] proposed 2006 capital budget of nearly $90 million was cut by $12 million at board of control yesterday but another $2 million will have to be chopped if the city is to stay within its self-imposed cap of $30 million on borrowing for capital projects.
All the talk lately about the importance of debt reduction vs. tax reduction by some councillors sounds pretty thin when board of control struggles to cap new debt at $30 million. This is an example of the leadership of board of control on the issue of spending restraint:
Meanwhile, the board approved the budgets of boards and commissions with only a $25,000 cut.

[…] Controllers were asked to rank capital projects on a scale of one to five with one being the top priority. Three hours later, almost all projects had been ranked No. 1 or 2.

Eager to whittle the dollar figure down, controllers voted to eliminate all projects ranked No. 2, with the exception of a few they upgraded to No. 1.
Apparently a category higher than No. 1 is needed.