Winnipeg Free Press - PRINT EDITION
Posted: 08/8/2014 1:00 AM | Comments: 0
Last Modified: 08/8/2014 10:41 AM | Updates
Pay less. Get more.
In the political arena, it's the often-floated idea we citizens can pay the same or less in taxes and actually get more of something we really need.
This is the Loch Ness Monster of public policy -- something frequently discussed but rarely if ever seen. And for good reason. If there is one thing we can put into the same category of certainty as death and taxes, it is the cost of government is always going up. So, if you freeze revenues, you must either freeze or lower expenditures.
That is to say -- pay less, get less.
This is essentially what the federal Conservative government has done. As part of ongoing austerity initiative to get the deficit under control, the Tories have reduced the federal civil service by more than 20,000 positions, and reduced or eliminated a wide array of services. If there is anything virtuous in these decisions, it is that no federal Tory has ever promised these cuts could be done without any change to staffing or service levels.
Does anyone still believe a politician who promises to do more with less? It seems in this post-recession environment, most of us woke up, smelled the coffee and understood that, like all good things, coffee has a cost. And that cost is always going up.
That doesn't mean candidates aren't still trying to sell the idea and that a lot of us aren't willing to buy it.
In 2010, Mayor Sam Katz sought re-election by proposing a tax freeze and accusing challenger Judy Wasylycia-Leis of bankrupting homeowners with her pledge of modest tax hikes. When it was over, the only part of that scenario that came to fruition was Katz's re-election. Taxes went up by more than Wasylycia-Leis pledged.
This year's civic elections are demonstrating no loss of interest in this gambit. To date, several mayoral candidates have consumed the "pay- less-and-get-more" Kool-Aid. However, none have done it with such flourish as former councillor Gord Steeves.
Steeves tried to make up for a messy start to his campaign with a series of pledges to sell city-owned golf courses, parkades and other real estate and use the proceeds -- optimistically estimated at more than $300 million -- for infrastructure.
Those pledges set up his biggest platform announcement to date: a four-year tax freeze without any cuts to staff or services. This, Steeves said, means citizens would be "paying less, getting more."
There are a number of flaws in logic at work here.
Infrastructure is surely the city's biggest cost -- the total unfunded infrastructure deficit in Winnipeg has been pegged at nearly $7 billion -- but it is not by any means its only cost. The city, like all governments, faces increased costs for everything it does and acquires. By dedicating the proceeds of the asset sales exclusively to infrastructure, and freezing taxes, it would be impossible to maintain current staff or services without a tax increase. Even appreciation in the property tax base, something that happens even if the mill rate is frozen, would be swamped by increased operating costs.
There is also a profound disconnect between Steeves's plans for the asset- sale windfall, and basic infrastructure economics and logistics.
Selling valuable assets is a time-consuming process, as is negotiating a sale-lease back deal for the police headquarters. Steeves has promised to freeze taxes in his first year, even though it's not even remotely possible to realize the proceeds of those sales in time to help the city treasury.
There is also a concern around the idea of selling potentially money-making assets for a one-time cash influx. It is true some of the city's golf courses lose money and likely should be sold. But some make money. The same goes for parkades, which governments love building and owning because they produce long-term, predictable revenue.
Steeves will argue development of the surplus assets will more than make up for the loss of steady revenue. But Steeves knows every time a developer puts a shovel in the ground, it costs the city money in roads, sewers and other supporting services.
The infrastructure deficit, as mentioned earlier, is a problem measured in billions of dollars. And right now, nobody has a billions-of-dollars solution. No one should dismiss a good idea for addressing that problem that is in the millions-of-dollars range, as long as we are clear about the consequences.
Creating a short-term cash windfall to pay for a short-term tax freeze against the backdrop of a long-term, crushing need is not, in any definition, a good or desirable bit of public policy.
It might be a bit easier to give Steeves credit if he were willing to admit his plan, which may cost ratepayers a bit less in the short term, was going to manifest in cuts to staff and services.
At least then, we could debate his proposal in real terms in the real world.
Instead, Steeves has lured us to the shores of Loch Ness with the promise that, despite all evidence to the contrary, something great will emerge.
Republished from the Winnipeg Free Press print edition August 8, 2014 B1
Updated on Friday, August 8, 2014 at 8:21 AM CDT: corrects typo in election year
10:41 AM: corrects typo
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