Spend-happy mayoral candidates need dose of fiscal reality By: Dan Lett Posted: 7:00 PM CDT Wednesday, Sep. 7, 2022

Opinion

Hey there, time traveller!
This article was published 07/09/2022 (1096 days ago), so information in it may no longer be current.

Of all the good ideas that have been floated by the enormous gaggle of mayoral candidates, few have touched on the most pressing challenge faced by the City of Winnipeg: it cannot afford to pay its bills.

The pandemic, huge weather-related events and an austerity-minded provincial government have put the city in what appears to be an endless cycle of budget deficits. That’s a huge problem because the city is legally prevented from carrying a deficit from one year to the next.

The city recently updated its fiscal outlook for this year, and is expecting a $55.9-million operating deficit. Winnipeg Transit will finish the year with a shortfall of 14.7 million. The majority of the operating deficit is due to higher snow-clearing costs ($34 million) and increased expenses incurred by police, fire and paramedic Service and emergency medical expenses.

To cover the shortfall, the city will be forced to draw more money from its fiscal stabilization account, which will be reduced to just over $20 million. That is well below the $71.7-million minimum council previously set. There is no immediate prospect for it to be replenished.

In case it’s not obvious to mayoral candidates, and there is evidence to suggest that some are blissfully ignorant about this overarching problem, this is a situation that will drastically erode civic services.

Coun. Jeff Browaty, chair of the city’s finance committee, had some sobering comments about the deficit and what it might ultimately mean to city services. Browaty told the Free Press he thinks the city needs to “refocus on key priorities.”

He went on to muse about closing libraries over the summer when fewer people use them, and getting out of things like public housing, which, when push comes to shove, is a provincial responsibility. “We’re not going to make a material difference in that field, so why are we now investing in… something that’s not a core responsibility?” Browaty asked.

He is not wrong when he says the city needs to re-examine the services it supports with its precious property tax revenue. However, housing is not so easily divorced from core city priorities.

If people have safe and affordable places to live, they are not living on the street or setting up encampments on public land. Affordable housing is key to creating stable and sustainable families, which helps people resist the siren call of substance abuse and crime.

In reality, there are few things the city does now that are easily discarded as non-city responsibilities. The language around things like “key priorities” and “core services” is really shorthand for plans to divert money away from things such as libraries, recreation and social services, and into the bottomless pits that are road repairs, police and fire services.

Unfortunately, and for obvious reasons, mayoral candidates spend less time talking about fiscal sustainability and more time floating new and improved ways of spending money. When they do talk about affordability, it’s only in extremely mushy terms.

Fixing roads and providing viable policing and fire services are important for any local government. Given the basic economics of all three core services, it’s not hard to see how they consume enormous chunks of the city’s limited revenue base. However, they are not the city’s only priorities. The real challenge facing mayoral candidates is how to serve these three beasts and find enough money to provide all the other things people need from their city.

Unfortunately, and for obvious reasons, mayoral candidates spend less time talking about fiscal sustainability and more time floating new and improved ways of spending money. When they do talk about affordability, it’s only in extremely mushy terms.

There’s lots of talk about “creating more value,” and “finding savings within existing budgets.” Those are worthy goals, but delivered during a mayoral campaign, they are extremely vague ideas that are not accompanied by concrete plans. As such, they are little more than wishful thinking.

Although the pandemic and weather-related events are to blame for part of the fiscal instability the city faces right now, there are structural issues that limit the city’s ability to cover the cost of basic services, particularly when it comes to revenue.

The city continues to rely too heavily on property taxes to cover its costs. Legally, the city is limited in its ability to bring in new revenue streams, particularly when provincial governments are unwilling to be complicit.

The city continues to rely too heavily on property taxes to cover its costs. Legally, the city is limited in its ability to bring in new revenue streams, particularly when provincial governments — which ultimately have to agree to amend the city charter to allow new taxes — are unwilling to be complicit.

The city does get significant funding from the federal and provincial governments, but it is not permanent and — in the case of the current provincial government — is offset by austerity-minded decisions to freeze annual grants for city operations and transit.

Outgoing Mayor Brian Bowman correctly tried to bring in development fees on new housing, but mismanaged the initiative and was beaten back by developers. His failure on this file will no doubt make this year’s mayoral candidates loath to undertake similar efforts.

A robust menu of new and improved services is certainly welcome during the mayoral campaign, but it would be good if someone was able to serve a side of fiscal sustainability.

dan.lett@winnipegfreepress.com

Dan Lett
Columnist

Dan Lett is a columnist for the Free Press, providing opinion and commentary on politics in Winnipeg and beyond. Born and raised in Toronto, Dan joined the Free Press in 1986.  Read more about Dan.

Dan’s columns are built on facts and reactions, but offer his personal views through arguments and analysis. The Free Press’ editing team reviews Dan’s columns before they are posted online or published in print — part of the our tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.