A Better Budget: My Proposal

2012 Budget Staff Proposed 2013 My Proposed 2013
Culture 21.9 22.3 22.3
Economic Prosperity 8.4 8.4 8.4
Environmental Services 16.4 16.5 16.6
Parks, Rec & Neighbourhoods 28.2 28.2 28.5
Planning 4.8 4.9 4.9
Protective Services 145.6 152.9 151.4
Social and Health 71.3 68.4 69.4
Transporation 53.6 54.8 55.5
Corporate and Operations 117.2 122.4 121.3
467.4 478.9 478.3

This budget proposal is premised upon the following avoidance or acceptance of reductions as offered by staff.

Highlights of Reductions Avoided:

  • Cuts to Accessibility for Ontarians with Disabilities Program
  • Cuts to social or affordable housing
  • Elimination of green bins
  • Moratorium on new bike paths
  • Reductions to library services
  • Reduction of sidewalk plowing
  • Increased recreation service fees
  • Reduced investment in London CAReS
  • Reduction to Middlesex London Health Unit
  • Staff reductions (approximately 18 jobs saved)
  • Elimination of double decker bus tours
  • Cuts to Downtown BIA

Highlights of Reductions/Revenues Accepted:

  • Reduced economic development funds
  • Increased service fees and fence fees
  • Deferral of Fire Service training tower move
  • Reduced contribution to Urban Works Reserve Fund
  • Fire Services service review
  • Reduction in capital grant program
  • Reduction in brownfield studies
  • Deferral of “In Motion” funding

This budget is also premised on the following reductions not proposed by staff:

  • Reduction of the increase to Police Services from 3.6% to 2.0%

Other budget reductions for consideration would be changing the Development Charge Exemption for industrial from 100% to some other percentage to be determined, and reviewing the fast-tracking of Storm Water Management Ponds for greenfield development.  Either of these could bring us to 0%, but are of a complexity to calculate that is a bit beyond me.

Overall, I am proposing a 2.3% increase to municipal property taxes, which equates to a $55/year increase for your average property owner, or less than $5/month.  This is the cost of saving housing, bus services, libraries, green bins, etc.  A cost I hope most would be willing to pay.

Update: With changes in assessment growth, my proposal revises to a 1.8% increase.

Update 2: Thank you to the sharp eye of Nathan Smith, I have revised my reduction to the Police Services budget.  I had proposed this believing that they were still adding 16 new officers, but the 3.6% increase includes deferring this new hiring.  Leaving the Police at 3.6% brings the proposal back closer to my original over 2.3%.

Affordable Housing Motion

I will be making the following motion at the January 16th meeting of the London Housing Advisory Committee:

  1. Recalling that London’s Community Housing Strategy was approved by Council in 2010;
  2. Acknowledging that objective 5.3 of the strategy is to “Maintain annual $2 million City investment in affordable housing”;
  3. Recognizing that every $1 of municipal investment has historically leveraged $7 of investment from other orders of government and the private sector;
  4. Acknowledging that best practice in affordable housing is a ‘toolbox’ approach that includes both less expensive temporary units and more expensive permanent units;
  5. Noting that the existing Affordable Housing Reserve Fund is already fully committed to outdraws;
  6. and noting that of the City goal of 1000 new affordable housing units our current Program Delivery and Fiscal Plan is for 614 new units:

Motion: The London Housing Advisory Committee recommends that City Council reaffirm its commitment to the London Community Housing Strategy, in particular objective 5.3 to maintain an annual $2 million City investment in affordable housing.

A Better Budget: Primer

money_on_scaleI have thoroughly critiqued the 2013 London Municipal Budget, so it’s only fair that I offer an alternative.  In fact, I have been asked repeatedly, “What percentage increase would you propose if zero is a bad idea?”  The simplest answer would be to just go with the proposal by the City’s Finance department.  However, I have already highlighted that this comes with increased debt, so I believe there is a more nuanced approach available that both addresses spending, while ensuring the programs and services exist for London’s most vulnerable citizens.  In addressing this, I hope to present how someone can be fiscally conservative, and progressive, and socially liberal.

Before tackling London’s situation, however, I believe a primer in governments and budgeting is useful.  To this end, the current ‘fiscal cliff‘ in the U.S. provides an excellent example of challenges faced in public budgets.  On the revenue side, Bush era tax cuts are set to expire meaning an increase of $388 billion in tax revenue.  At the same time, spending is set to be reduced by $172 billion.  This would mean reducing the federal deficit from the current level of $1.1 trillion to $641 billion, a reasonable goal for a government currently approaching $16 trillion in debt.  This is all well and good, but it means removing $560 billion from the economy, reducing GDP by -0.5%, and pushing unemployment over 9%.  It would lead to deepening of the ‘Great Recession’, which already shows no sign of ending.

So, what to do?  I believe that the U.S. should go ahead with the full proposed elimination of tax cuts and elimination of spending.  Yes, this would mean some pain in terms of decreased household incomes, but the changes are very strongly scaled to income so that those in poverty would see little difference, whereas the top 10% of income earners would see a much bigger impact.  To instead continue to borrow to avoid the fiscal reality means not just delaying the inevitable, but actually making the crash worse when borrowing runs out.  We would have to come up with a new acronym to replace PIGS.  To be fiscally conservative means that when times are tight, we live tight, otherwise your debt to GDP ratio starts to look like this.

Closer to home is the Ontario budget and deficit, which were very well unpacked in the Drummond Report.  I have written about this before, and in my fourth key principle highlights the opinion that governments need to get out of playing Santa Claus, giving out money to everyone to garner support.  In the Drummond Report this includes water subsidies, hydro rebates, tuition rebates, and corporate subsidies/rebates (referred to at times as ‘corporate welfare’).  Local economist Mike Moffat highlights that corporate welfare (and GST reductions, but that’s another discussion) limits government’s ability to provide the programs required to reduce income inequality.  If governments reduce deficit spending and are willing to tackle both revenue and expense sides of budgets, they will actually have more resources to put towards those most in need: fiscally conservative, socially liberal.

The current London budget represents the exact opposite of what I consider good budgeting: reducing debt while enhancing programs that meet the needs of the most vulnerable.  There are areas where we need to start paying true costs, and there are areas where we need to stop giving money away.  However, there are also areas that I believe require more resources.  I will outline this proposed better budget in my next post.