Edward Keenan: It pains me to say it, but there’s a $1-billion hole in Toronto’s finances — and few options to fill it.
With the exception of new spending — either on transit improvements, new construction, or new fees to support existing ones — the city’s fiscal position is a shambles.
This is the Toronto problem: a city with one of the highest poverty rates in the world, where unemployment is about double that of the national average, and where the average family income is close to $26,000.
And yet for years, city council has been spending its way towards a balanced budget simply by ignoring the problems that confront it.
The city has been forced to borrow over $30 billion between 2008 and 2011 — money that could have gone to the people.
Many of the city’s most pressing problems — homelessness, poverty, homelessness, racism in government, housing affordability, homelessness, homelessness — are all rooted in a lack of fiscal capacity.
While the city’s long-term growth plan calls for a city-wide tax on real estate transactions to fund housing, the city’s short-term operating plan does not.
Instead, it simply proposes to tax some property owners who are likely to have large properties sitting vacant.
The city can’t justify why any of the properties it tries to tax can be vacant. And by taxing properties that are not currently owned by the people who live in them, Toronto will miss out on tens of millions of dollars in taxes from people who own their properties.
With no mechanism to generate revenue, the city is forced to borrow over $30 billion between 2008 and 2011 — money that could have gone to the people.
The city is not alone. Across Canada, municipalities are grappling with the same problems. And in a report released in June 2013, the Canadian Centre for Policy Alternatives estimates that in 2012, the government of Canada — through a variety of sources — borrowed almost $20 billion in order to pay for new programs.
There are similar problems in the United States