The budget before David Miller took office had a projected shortfall of $128.9 million. David Miller's first budget in 2004 had a project shortfall of $344 million. In 2005, it rose to $400 million. In 2006, $532 million. In 2007, $575 million. In 2008, $415 million. And in 2009, $679 million.
Notice how most of the time the shortfall got higher and higher and never once got into the arena of a surplus? Even after the introduction of the Vehicle Registration and Land Transfer Taxes as well as a 3% property tax hike, the 2009 budget deficit continued to bloom.
And yet in 2010, shortly before his departure, David Miller was able to pull off a magic trick of going from continuous and at times record deficits into a $250 million surplus. He even found an extra $100 million in a sock drawer in City Hall just before he left office.
It's a miracle!
Present Mayor Rob Ford, having already toasted the Vehicle Registration and Land Transfer taxes, is projecting a $774 million budget shortfall for 2011. Of course, Ford opponents are up in arms suggesting he has been lying about the "gravy train" spending down at City Hall and that he somehow has created a $1 billion turnaround in Toronto's financial situation.
Now, I don't believe government budgets. I'm of the mindset that budgets are one part accounting and three parts political theatre and always assume that whoever is in power is going to be playing creative accounting to make their opponents look bad and themselves look good. But looking at the numbers, one very interesting thing popped into my mind...
It's really hard to believe that with no major spending cuts Miller could push Toronto's financials $1 billion upwards over the course of one year during the worst recession since the Great Depression. It's equally hard to believe that having actually decreased spending Rob Ford could push Toronto's financials $1 billion downwards even with ridding Toronto of two of David Miller's tax grabs.
However, if the shortfall in 2009 was $680 million and let's say hypothetically that nothing actually did change going into 2010's budget and the surplus was creative accounting. And let's also say hypothetically that Miller honestly did find $100 million.
Using 2009's numbers that would put the budget shortfall at $580 million. That's roughly $200 million less than this year's projected shortfall. Coincidentally, $200 million is precisely what was taken out of city revenues with Rob Ford's cancellation of the vehicle registration and land transfer taxes.
It's almost like David Miller's last budget shortfall never did turn into a surplus and this year's increased shortfall was entirely because of the Vehicle Registration and Land Transfer Tax elimination.
But I'm sure that's just a coincidence.
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