Toronto’s property taxes are 53% higher than the national average, in part because the city spends too much money on unnecessary “niceties,” according to a new report the Mayor dismissed as “very illinformed.”
The study, conducted by the Winnipeg-based Frontier Centre for Public Policy, a right-leaning think-tank, looked at the financial shape of Canada’s 30 biggest cities and concluded that Torontonians shoulder more debt and taxes than their counterparts in other large cities.
“The residents of Toronto benefit from a solid financial base, including significant investments in non-core assets,” the report says. “However, they also pay very high taxes to a municipality with a huge appetite for public funds, proportionately higher non-core spending priorities, and a high level of debt.”
Mayor David Miller, shivering after an announcement on the waterfront, said the research was so shoddy it barely deserved to be called a study.
“I think the authors of this report appear to not understand anything about the City of Toronto or its budgeting process whatsoever,” he said.
In a bid to even out comparisons between cities with vastly different populations, the study’s authors broke down the figures by households, and divided the cities into categories of large, medium and small. The study drew on data from 2005.
The Frontier Centre found that Toronto’s municipal government spends significantly more per household than its big-city peers.
Toronto’s operating spending — the money it doles out on day-to-day expenses like wages — works out to $7,105 per household.
Ottawa ranked second with $5,303 in spending per household, followed by Montreal at $4,727. However, Toronto ranks third in spending on capital expenses, behind Ottawa and Edmonton.
David Seymour, a policy analyst at the Frontier Centre and co-author of the report, said part of Toronto’s problem is its addiction to spending on “non-core” services such as recreation and culture.
“If you’re a municipality which is really struggling financially, is having to tax highly, is in a lot of debt, then you have to ask whether [you] can truly afford to spend a lot of money on niceties, on things the city could function without,” Mr. Seymour said.
“Toronto’s financial position is generally poor … so Toronto would be a city for whom high necessities is more of a problem than the other 30 cities we monitored.”
The study’s authors drew up a list of services they considered “core” and “non-core.”
The core column included such items as police, fire, transportation and planning, while the non-core or “nicety” column included administration, recreation and culture, building services and social services, despite the fact Ontario cities are legally obligated to pay for some social services downloaded by Queen’s Park.
Most cities outside Ontario do not shoulder that burden.
Toronto spends 32% more on niceties at the expense of necessities than its large city peers, the study concluded.
The report also found Toronto has the third highest debt per household among Canada’s eight largest cities, behind Montreal and Calgary.
Toronto’s debt per household is $2,671, while Calgary’s is $3,843 and Montreal’s is a whopping $8,274.
Toronto’s debt per household is actually below the bigcity average of $2,794, but Mr. Seymour said Montreal’s hefty debt distorted the average.
“If I was a municipality, I wouldn’t use Montreal as a yardstick,” he said.
LARRY MITCHELL REPLIES TO MAYOR DAVID MILLER
Our research has not been in any way, to quote Mr Millar, ‘shoddy’. It has been hampered though by very poor public information coming out of Toronto and many other Canadian city’s annual financial reports.
Frontier’s report unashamedly and unavoidably is based on an analysis comprised of broad brush stokes.This lesser precision of reporting has resulted directly from Toronto’s own unsatisfactory, incomplete and frankly inadequate public information disclosures.
If the exhaustive and detailed analysis of Frontier’s professional analysts has been unable to be as defintitive as the Mayor appears to desire then the solution is in his hands.
To shoot the mesenger (and the Mayor knows it) is just a cheap shot … but for him to show some leadership and to insist on the City providing good information to improve the public’s knowledge of how well or how poorly his organisation is performing is harder.
The need for much better information provided by the municipalities is in fact a major plank of the Frontier initiative. A full reading of the Frontier report would make this abundently clear.
The gauntlet has been thrown. It will be a matter of great public interest to guage the reaction. Is it to be invective and bluster? or are there Canadian cities out there who will pick up the gauntlet and accept the challenge?.