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.