Good budget muddled with terrible logic

Hey there, time traveller!
This article was published 02/03/2016 (3823 days ago), so information in it may no longer be current.

Before too much criticism is levelled at Winnipeg city council for its draft 2016 budget, it should be remembered that this is a genuinely horrible job.

Civic budgets are complex, confusing cocktails of countervailing forces, few of which are intuitive or logical, particularly when you’re trying to compare this year’s budget plan with last year’s plan. Revenue streams involve a seemingly endless stream of unexplained reserve transfers, fee increases and tax hikes; the year-over-year changes in expenditures across the full range of civic departments are harder to nail down than a rousing game of whack-a-mole.

That being said, the 2016 budget Wednesday is a whimsical document.

There are winners, of course. Transit, the arts community, police, fire and paramedic services and — the big one — infrastructure all benefited from significant increases in funding that were well beyond, and in some cases many times, the rate of inflation. The city will spend $105 million on its roads this construction season, a record amount. 

On the revenue side, this is a budget with bite. In addition to tens of millions of dollars in transfers from various reserve accounts and a 2.33 per cent increase in property taxes, there is a 25 per cent increase in frontage levies and nearly 100 other new or increased fees. None of the tax or fee increases is particularly onerous or unjustified, particuarly given the enormity of the challenges facing the city. But it’s hard to get a clear picture of the total revenue impact because of the thick, goopey sugar coating Coun. Marty Morantz and others are giving the budget.

The losers are a lot harder to pin down. Listening to Morantz, the chairman of the city’s finance committee, the 2016 budget is not only balanced, it will not lead to any appreciable cut to services and only minimal impact on property owners. That would be a huge accomplishment, if it were true.

Take the hike in property taxes. Morantz and Bowman said repeatedly “every cent” of that increase would go to infrastructure: two per cent to roads, and 0.33 per cent to rapid transit. Except that’s not entirely true.

In fact, a good portion of the tax hike is going to reduce the city’s borrowing for capital. That means even though two points of property tax generates nearly $10 million in revenue, total spending on infrastructure is only going up by about $2 million. Not a scandal, but it is an unnecessary bit of bait and switch.

As for the frontage levies, one would have hoped Bowman and company could have abandoned the maddening Katz-era claim that the fee charged on the length of the frontage of a piece of city property isn’t a property tax. If it looks like a property tax, and smells like a property tax, it’s a tax on property.

The same muddle is in play on the service side of the equation. Morantz said the budget would not result in any impact on service delivery. However, the city is counting on nearly $21 million in vacancy management savings this year to balance its budget.

That means civic departments that lose employees to retirement or leave will delay filling those positions as long as possible to save the cost of salaries and benefits. Vacancy management is a clever bit of government accounting that also allows the city to claim it is not actually cutting positions because an unfilled job still counts as a full-time equivalent (FTE), even if there isn’t a real live person in it.

Increasing the savings from vacancy management by nearly 20 per cent this year will have an impact on front-line services. To suggest otherwise is a major blow to the mayor’s pledge to increase transparency at city hall.

The most frustrating thing about these small assaults on logic and transparency is they are unnecessary. No one with even a modicum of knowledge about the challenges of local government would think what is proposed in the budget, even without its sugary coating, is unreasonable. But there will ultimately be a day of reckoning for a local government that is inexplicably afraid to admit to all the reasonable things it is doing.

This is not, by any means, a bad budget. Voters who supported Bowman’s progressive agenda for city hall should find more than enough (transit, arts funding) to smile about. It also continues to pay tribute to police, fire and paramedic services with significant increases in funding. And it is devoting impressive sums to infrastructure, for which Bowman, Morantz and the rest of council should be applauded.

However, on the transparency side of the equation, this is a budget that uses many of the same old gimmicks and tortured logic as past administrations. If there’s any good news in that observation, it’s that fixing this situation won’t cost taxpayers a dime.

dan.lett@freepress.mb.ca