So why Zero?

8 peasA zero percent municipal property tax increase means cutting many services that Londoners enjoy.  Zero percent means delaying costs and increasing debt.  Zero percent leads to the temptation of the very short-term thinking of selling assets.  And zero is going to hurt most those experiencing poverty in our community.  So why are eight City Councilors (known locally as the ‘Fontana 8’) driving for zero percent for a third straight year?  It is assumed by many that it is simply a voting block who all merrily work together on achieving Mayor Fontana’s campaign promise.  However, I would suggest that it is much more complex than this.

Spending any time at Council and Committee meetings will show you that the Fontana 8 is actually a rather strange coalition of diverse Councilors with diverse perspectives.  And there is no love lost between some members of the coalition, who vote together but could not socialize together for more than a few minutes.  The motivations for zero percent are almost as many as the councilors who vote together on this:

Some are motivated by a strong allegiance to the Mayor.  Whether it be mutual friends, mutual campaign financiers, mutual political parties, or mutual circles of influence, regardless of criminal charges this past year, the Mayor still holds strong social capital with some.  Some members of the coalition will vote in line with the Mayor no matter what, on all but the most benign items.

Some are motivated by the political benefits of holding the zero percent line.  Unfortunately, our voter base is largely cynical, and surveying the voting population on the question of “Do you think municipal tax dollars are well used?” would be highly unlikely to yield positive results.  Minimizing taxes plays well to a large cynical base, and was likely the motivation of the initial promise.  Those seeking longevity in politics will see the value of this position.

Some in the coalition are as cynical of tax dollar usage (or more so) than the general population and truly believe that services can be improved simply by slashing budgets.  These councilors would say that “we need to stop wasting money on golf” even when presented with the fact that our golf program actually brings in revenue, or that “we can save money now that property assessments have gone up” even after being presented with the fact that the City sees no net tax gain from Municipal Property Assessments.  I would suggest that these Councilors are the most dangerous to the ‘tax payer’ as the recklessness with which they cut and sell can actually lead to long-term cost increases.

Lastly, some in the coalition simply see no value in government, and would merrily vote it out of existence or privatize all services.

Although the coalition has held strong through some difficult votes, the individuals are still individuals, and driven by different motivations.  This means that not all are committed in the same way to zero percent.  If you would like to speak directly to Council, and tell them what you feel the role of municipal governments should be, here’s what you can do.

Who Zero Hurts the Most

241 SimcoeThe zero percent 2013 municipal budget, and the subsequent budget cuts, will effect us all in some way by impacting many services and future tax rates.  However, the two cuts that I believe will hurt the most are those to affordable housing and to social housing.  I believe these will hurt the most as they will have immediate and serious impact on the most impoverished in our community, particularly those experiencing homelessness.

To understand these cuts, you need to understand a bit about social housing in London.  There are two municipal programs: The first is new affordable housing, which is that which  the city contributes towards, and leads to brand new units; the second is London Housing, which are the many buildings that were downloaded to the City from the Province in 2001. New affordable housing is the focus of our Housing Strategy and the target of 700 new units.  London Housing we manage and maintain, and includes some of the large developments that have gained some notoriety (ex. 580 Dundas, 241 Simcoe, Boullee St).

Cut to new affordable housing

Recommendation 5.3 of the Council approved London Community Housing Strategy is to “Maintain the annual $2 million City investment in new affordable housing”.  This annual investment is a municipal commitment to housing that has been used effectively to leverage at a 7:1 rate investment from the province, the feds, the private sector, and the not-for-profit sector in housing.  This allowed us to come close to our last 5 year goal (2005-2009) of 1200 new units, and has us on a good path towards a 5 year goal (2010-2015) of 1000 new units.  This gives some hope for putting a dent in the housing wait-list of over 3000 family units.  ‘New units’ are created using a “toolbox approach” which can range from rent subsidies ($2400/year) to new high density units ($145,000 per unit).  This toolbox approach allows us to meet the varying needs of individuals, and also mix both short-term, quick solutions to meet the need and long-term solutions to prevent future crises.  When building, the City never builds itself, but partners with the private sector to ensure both efficiency and quality, with the off-spin of job creation.

So, what Council is proposing is an annual cut of $1 million to this fund.  This will have a severe and immediate impact on our ability to create new affordable housing, and particularly those solutions that are the most long-term (for example, subsidies are cheap but only last for 5 years, new unites are expensive but guaranteed for 25 years).  What this equates to for those working at street level is the inability to move people out of shelter and into housing.  This leaves people in both less humane living situations and in scenarios that end up costing the system more in the long run such as shelter, hospital, psychiatric facility, and jail.  This cut is a decision by our municipal government to make the homelessness situation in London worse.

Reduction to London Housing services

The proposal in regards to London Housing (ie. existing social housing downloaded from the province that the City of London now maintains) is a reduction of $481,000.  This will be achieved by: eliminating summer day camps for kids on site; elimination of paid off-duty police patrols; reducing grass cutting from weekly to bi-weekly; reduction of twice-weekly garbage pickup to the regular City cycle (which was implemented in 2009 due to the stench from accumulated garbage in large developments).

During last year’s budget deliberations in which they were proposing cuts to new affordable housing, some councilors were clearly confused about the difference between the two programs: new affordable housing and London Housing.  They bemoaned the quality of London Housing, speaking of ghetto-ized poverty, to excuse not creating any new affordable housing.  And it’s true, what we have inherited from the province is not always the best, but this is a silly reason to not build new and better.  Also, at the same time that Council bemoaned the quality of London Housing, they are now proposing cutting the very budget that makes these sites a little bit better.

So, we recognize that these massive developments are not the best long-term models for social housing, but we have them now, and must maintain them as best we can as a far better alternative to individuals and families staying in shelter.  To cut London Housing service budgets is a choice by Council to further ghetto-ize those in social housing.

I So Move…

The following is a motion that I am sending for our January 7th meeting of the London Homeless Coalition.

The two greatest human rights concerns of our nation and our generation, in my mind, are homelessness and the plight of the First Nations of this land.  It should come as no surprise that the two are intricately connected, and therefore of concern to the London Homeless Coalition.  Both involve histories of marginalization, poverty, disenfranchisement, prejudice, and poverty.

In regards to the First Nations the question is, how should we respond?  I would suggest that we respond primarily by rejecting the common assertion “We have done enough.”  Our current federal government is pushing the narrative that whether it’s through apologies or through restitution payments, the ‘Canadian’ response to the plight of First Nations has been sufficient.  Therefore, any further concerns reflect a short-coming of First Nations people, no fault of ‘ours’.  I believe we need to adamantly reject this perception.  Whether it’s the problematic way we have structured funding to First Nations (http://natpo.st/t5sOil) or the way in which legislation is being passed (http://www.idlenomore.ca/ under Bills & Other Resources) the current treaty relationship is not working well.  In particular, whether we look at rates of suicide, age of death, poverty, homelessness, housing conditions, etc., we as Canadians should be gravely concerned.  Most importantly, through the Idle No More movement, we need to hear the voices of Aboriginal peoples who are telling us it isn’t working.

As the London Homeless Coalition continues to work with Darlene in enhancing our relationships with the Aboriginal people of our community, I believe there are important steps we can take as along the way, as recommended at our last meeting.  To this end, I would like to make the following motion:

I so move that the London Homeless Coalition accepts and endorses the UN Declaration on the Rights of Indigenous Peoples (http://www.un.org/esa/socdev/unpfii/documents/DRIPS_en.pdf).

The Worst Idea of All

In yesterday’s post I highlighted why the whole idea of this Council being the ones to save us money is largely smoke and mirrors.  In the same way, driving to zero does not necessarily solve financial difficulties, and may in fact make them worse.  However, what I didn’t mention in yesterday’s post was the worse idea of all: selling off assets.

See, what is becoming clear is that although the Fontana 8 got elected on the wave of public cynicism about the handling of municipal tax dollars, they are beginning to realize that there is no magic bullet to make things cheaper, particularly when you are trying to mix austerity staffing with stimulus spending (under the rubric of job creation).  In trying to keep taxes low while fast-tracking greenfield residential development, industrial land purchasing, and some pet job-creation projects, things are getting beyond thin (hence the debt mentioned yesterday).  The hope was to trim the fat, but they didn’t realize the budget was already of Lance Armstrong proportions (not that we’re cheating, no amount of blood doping can change a budget’s numbers).

So, when the cash is tight, revenue is relatively stable, and expenses are already minimized, where do you look?  You look for a goose that will lay a golden egg.  In the case of London, Council is looking for assets that can be sold off for immediate capital.  This is a terrible idea.  The thing about an asset is that it’s an asset.  Whether it costs us a bit but has big spin offs (such as the Convention Centre), or actually makes us a bit of money (such as our golf courses), or makes whole whopping amounts of cash (the London Hydro loan), these assets are long-term value for the taxpayer.  Take the London Hydro loan for example which pays us approximately $4.2M annually in interest.  We could demand immediate repayment of the $60M for some quick cash, but would then need to replace the $4.2M annually of interest payments with tax increases going forward.

What the selling of assets equates to is the most short-term of financial planning, it’s seeking political glory at the expense of future tax payers.  Yes, I want good projects to happen in our city, but not at the same time as we are slashing services to our poorest neighbours, and passing on debt to our future selves and our kids.  Oh, and if you were wondering, the farmer who slayed the goose who laid the golden egg found no gold inside and he and his wife were forced to become labourers.

Do you have a problem with this kind of budgeting?  Well, here’s how you can get involved in suggesting something different.

You may want to double-check your math

The ultimate stated goal of the 0% tax increase is to save you, the taxpayer, money.  This sounds like a fine goal, because after all, who doesn’t want to save a little money?  In fact, TransUnion has reported that average Canadian non-mortgage debt has risen to $26,768, meaning that we are all feeling a financial pinch in one way or another.  If there’s a spot where we would like to save a bit of money, it would certainly be on taxes.

So, let’s look at the math of the proposed tax savings.  The Fontana 8 are presenting themselves as the fiscally responsible choice, equating this with lower taxes.  Does it add up?  Are the 8 saving you money with their proposed cuts?  Let’s look at deferred costs, increased fees, reserves, and debt.

Deferred Costs

There’s saving the tax payer money, and then there’s ‘kicking the can down the road’.  By this phrase I mean simply taking expenses we have to pay, and waiting to later to pay them.  Whether it’s delaying service to our City vehicles ($543,000), delaying funds for accessibility adaptations ($561,000), delaying the neighbourhood hubs ($93,000), delaying the In Motion health promotion project ($40,000), delaying the new fire service training tower ($2,398,000), delaying new bike lanes ($110,000), delaying purchasing new landfill properties ($1,000,000 in 2014), delaying building a new fire station (700,000 starting in 2017), delaying Commissioners Rd improvements ($5,250,000 in 2020), delaying purchasing industrial land ($600,000), and delaying replacing buses ($500,000), you might be shocked to learn that over $4,800,000 of ‘cuts’ for 2012 (not to mention going forward projections) are things we’ll just have to pay for later.

Increased Fees

So, if it’s about saving you the tax payer money, it shouldn’t mean leveraging more money from you in other ways, should it?  Well, you would be wrong.  Through increased recreation facility fees ($137,000), building approval fees ($19,000), fence inspection fees ($5,000), rental unit licensing fees ($180,000), bounced cheque fees ($6,000), and taxation service fees ($59,000), $406,000 of tax reduction is done by increasing our fees.

Raiding Reserves

Reserves funds are NOT rainy day funds, they are the chequing accounts for our different City programs that we use to pay our bills.  So, when a program or division needs to spend money, having cash in the reserve fund means they don’t have to borrow to spend, saving us $1.4 million in interest payments this year alone.  This is why healthy reserves are a major part of our ‘triple A’ credit rating.  Much of the money in reserves is already accounted for in anticipated bills or contracts already signed.  Of the $191,000,000 in reserves, $113,000,000 of that is already planned to be spent.  So, this isn’t just piles of cash we are sitting on.  However, once again we see a proposed $1,000,000 reduction to the Affordable Housing Reserve Fund.

Debt

The greatest hit to the pocket book, as any family knows, is to put operating expenses (ie. food and mortgage), onto the credit card.  So, increasing debt has not only negative long-term consequences, but exponential negative long-term consequences.  No Council can claim to be fiscally responsible if they are shoulder future Londoners with more debt while ‘saving us money’.  Guess what, this is exactly what is happening.  Prior to 2010, we were in the process of paying down our debt, which costs us $60,300,000 annually in servicing costs.  In 2010, our total debt was $319.8M, but with the change to taking on more debt, we are now sitting at $347.2M in debt.  And the plans of our 0% Council?  To have us at $477.1M by 2014.  Yes, that’s right, the 0% tax increase has come hand-in-hand with and 8.6% debt increase to date, with a projected 4-year 49% debt increase.  If rates hold the same, and we reach the forecasted debt level, we will be paying $22.2M more in debt servicing in 2014 than we are in 2012.  Even if we start holding debt even as of 2015, our debt servicing costs by 2020 will be $91.3M, or about 50% more than they are now.

Does the math from this ‘fiscally responsible’ Council worry you?  Here’s what you can do.

Third verse, same as the first…

…a little bit louder, and a whole lot worse.

This line from a popular camp song is a good summary of the London Budget 2013.  Because we’ve been down this road before, twice before, and again we find ourselves facing the reality of a campaign promise of 0% tax increases for four years.  So, the goal is the same, but the proposed results get worse each year.  Here’s just some of what we’re planning on cutting this year, and what staff have highlighted as the implications.  Want to see the full list?  Then check out this handy page.

1) Reduction in accessibility compliance 

“in order to ensure compliance, the City will incur all implementation and maintenance costs. Without sufficient AODA funds, the costs of compliance will fall to individual service areas. There is concern that meeting these standards may cause detrimental impacts to service levels.”

2) Cutting in half funding for new affordable housing

“Opportunities such as aligning funding and increasing supports to people once housed to reduce shelter beds and shelter usage, and focus on permanent solutions to homelessness in London under London CAReS, Hostels to Homes (or similar initiative) will be compromised.”

3) Eliminate funding for green bin pilot program

“There is an environmental risk that the targets set by the Provincial government for waste diversion will not be met. This can have an impact on other parts of the waste management system that require approvals from the Provincial government.”

4) Further delay of Neighbourhood Hub community building strategy

“Losing time in the implementation of neighbourhood friendly strategies that enhance quality of life in the city, with potential impacts on attracting families to London’s neighbourhoods. We will be three years behind planned implementation in 2013.”

5) Decrease of staff doing road patching

6) Elimination of weekend sidewalk plowing

7) 10 year moratorium on new bike lanes

“Council has accepted the Transportation Master Plan including cycling infrastructure improvements to promote a more active community. Without the Bike Lane Program, the network will continue to be discontinuous and not encourage growth of the cycling community. With more bike lanes, we can progress towards a continuous system and encourage more people out of their automobiles and reduce congestion & pollution around the City.”

8) Reduction in social housing programs

Eliminates 10 year repainting of units, summer kids programs, off-duty police patrols, reduces grass cutting to bi-weekly, and decrease garbage pick-up.

9) Library – Elimination of Sunday service

10) London Transit – Reduction in service hours

“Service level reductions on both the conventional and specialized services will result in reduced ridership which will impact the future levels of Provincial Gas Tax allocations received. The extent of the ridership losses will be dependent on a number of factors including whether the cuts eliminate the possibility for a transit trip entirely, or they result in a service that is unreliable to the extent that other modes of transportation are sought out. The most significant impact of the service reductions will be experienced by those transit customers who have no alternative, and depend on public transit for their mobility and access to the community.”

It’s Your Money

The 2013 municipal budget season is upon us.  I will be blogging regularly on the topic over the next few months, but wanted to highlight at the outset why this is important, and how you might get involved.  Whether you are a homeowner paying property taxes, or a renter paying rent, it’s your money that is used by the Corporation of the City of London.  And it’s a lot of money, almost $500,000,000 in just the tax levy supported portion of the budget.  This money is important, because it effects the things that you actually interact the most with in your everyday life: water, roads, neighbourhood design, police, fire, libraries, public transit, road plowing, and street lights.  Yes, we get far more excited about our federal politics, but it’s often the municipal items that mean the most to our lived experience.

So, if it’s your money, and if it’s a lot of it, you might want to have a say.  Fortunately, the City is working hard this year on giving you that chance.  If you want to learn about the budget and play with the numbers, you can attend the “Build a Budget Workshops”:

Build a Budget Workshops

Saturday January 12, 9-11am or 1-3pm

City Hall Cafeteria

Far more important than that, however, is the opportunity to talk directly to City Council, and let them know what you think of particular budget items.  Council is holding a public participation meeting to give you the chance to do just that.  It’s very simple, you show up, sit in the gallery, and they will ask if anyone has a comment they would like to share.  You go to the mic, and have 5 minutes to have your say.  I strongly recommend exercising your democratic rights and giving it a try:

Budget Public Participation Meeting

4pm, City Hall, Council Chambers