Thread by @g_meslin

1) This is @johntory, yesterday.

Can we talk about the “incredibly challenging budget year given the $80 million shortfall in land transfer tax revenue”?

2) Every year, the City Council budget deliberations begin with a presentation by the City Manager.

For the last half-decade, that presentation has included a warning related to the need for sustainable revenue sources, and over-reliance on land transfer tax revenue growth.

3) I couldn’t find the video, but in 2014 Joe Pennachetti spoke frankly to Council about the need for higher-than-inflation property tax increases.

https://twitter.com/g_meslin/status/444125385895469057?s=21

4) Peter Wallace, 2016:

“...the new normal for the City has been a budget that has been able to be balanced on the basis of very, very strong performance in land transfer tax....”

5. Peter Wallace, 2017:

“We are now in a situation where, if you want to make incremental progress against either the capital overhang or in terms of...an increase in service investments, we will need to revisit some of these tools” (revenue sources other than MLTT)

6. The accompanying warning:

“We are increasingly dependent on a revenue source that is cyclical, and has demonstrated strong cyclical behaviour in the past, And we need to think about that and take that seriously as decision-makers”

(did you miss that in 2017, @JohnTory?)

7. Last year, the largest source of new revenue continues to be land transfer tax.

“...and that is the core, that is the basis of this year’s operating budget”

Also a note that the residential market had softened, and revenue growth was carried by the commercial market.

8. Former City Manager Peter Wallace, last year, again cautioning Council as to the cyclical nature of land transfer tax revenues.

9. The warning becomes more explicit:

“If land transfer tax goes down, it will be a very challenging year. The reason that 2018 works is because land transfer tax has increased. If land transfer tax simply stays constant....this would be a much different budget.”

10. Before departing the City, Peter Wallace tabled the Long-Term Financial Plan. On March 19, 2018 - just under a year ago - he presented that plan to Executive Committee.

11. One last time, he delivers his warning to Council:

“if land transfer tax were to decline, the City of Toronto would in fact be in a position where it may actually have to cut or manage the impact on current service levels”

12. “…this is something that City Council does need to be aware of, is it has put base expense against a potentially volatile revenue source, and in a level of government that’s not allowed to run a deficit, that could be a concern, and could require corrective action.”

13. “what we now have is a gap between service commitments and revenue. That gap has been managed in the last four years by very significant increases in the land transfer tax…even if land transfer tax stays constant, the budget may be under pressure in 2019”

14. “our modelling suggests strongly that if the City Council wants to choose anything but a very narrow program reduction, cost-cutting focus on a very small number of services, it will require additional revenue…”

15. I suppose the implied question is whether @johntory, @cllrcrawford, et al. actually WANT to choose anything but a very narrow program reduction, cost-cutting focus...

...or whether they want to manufacture conditions for just that.

16. Also, let’s take a closer look at the chart on that slide, because wow…

17. “If the City of Toronto is going to increase service levels, it will not be able to do so on the basis of its existing revenue base”

So maintain levels if we keep winning the land transfer tax lottery, or declining levels when we inevitably stop cashing those tickets.

18. A final plea from the former City Manager for an adult conversation about revenue sources - property tax, land transfer tax, user fees, and other/new tools.

19. So over the past few years - all within @johntory’s mayoralty - the City Mgr has repeatedly advised that:

- land transfer tax is volatile

- dependence on LTT to manage the gap between revenues & service commitments is unsustainable

- we need to talk about revenue sources.

20. WHO COULD HAVE FORESEEN THIS???

21. The point is exactly this.

Mayor @JohnTory, budget chief @CllrCrawford, and their enablers on Council have wilfully mismanaged the City’s finances, continually ignoring, over a period of years, the non-partisan advice of the City’s chief bureaucrat.

https://twitter.com/paddygurks/status/1104385255581065221?s=21

22. The point is that a group of political decision-makers were repeatedly advised of an entirely foreseeable outcome, and chose to ignore that advice, placing the city in a precarious, unsustainable position, for purely political purpose.

23. And who pays the price for this negligent, dishonest fiscal management?

Those who can afford it least.

People who depend on transit, households that use rent banks, youth that might benefit from new hubs...

24. Consider what @johntory references here - not frills, but investments in Priority Areas. These are designated at-risk areas, home to vulnerable communities, that would benefit most from programs & investment.

That’s who pays the price.

25. That cost-of-inflation property tax increases can be sustainable and allow for maintained or expanded service levels is a fiction. It is an election year slogan that, once elected, the victor is forced to pretend is doable.

It’s the fiscal version of SmartTrack.

26. I share all of the videos in this thread because the critiques within are often dismissed as partisan, and I believe it’s important for people to see how they’ve been raised, repeatedly, by senior staff that are anything but partisan-minded.

(apologies for the terrible shakycam videos - I find people are more apt to engage with embedded videos than links to YouTube)