$100M in found money?

Should we really be all that shocked that Mayor David Miller surprised us with $100m in found money?

I'm writing this blog post while on a business trip to Shanghai, so I apologize if I don't have some real numbers at hand, but by memory, Toronto has revenues north of $3 billion. That means Miller's "surprise" amounts to around 3% of revenues. In that context, it doesn't sound so outrageous. But it also represents a 40% increase ($250m to $350m) above their earlier projections, and I'm sure this is what gets people's spider-senses tingling. I mean, they didn't have this information one month ago when they announced the $93/head property tax increase?

Hard to believe, isn't it?

As usual, the devil is in the details. To be frank, it is not at all uncommon to under-promise and over-deliver when it comes to municipal revenue projections. I just looked at the 2008 numbers quickly and note that the City came in around $235 million above budget. One can even argue this is good policy in politics.

It's the timing here - and the vague explanation - that irks me. Higher than expected returns on investments that we're led to believe surprisingly materialized in the last month are the source of the funds. Hopefully Mayor Miller will give us some further detail here because I don't buy it.

My guess, and by the sounds of it a lot of people agree, is that Miller has been holding this card for a while. Perhaps he was going to use it to fend off his foes in his own run for another mayoral campaign at one time. Who knows? Now, at the very least, he has done his left-leaning friend Joe Pantalone a big favour. The belt-tightening rhetoric from Smitherman and his compatriots in the middle-right sounds a bit odd when the City can find $100 million at the drop of a hat.

Or am I just being cynical?

Comments

[Sonny Yeung]

Nihao Anthony; you're being cynical. I have been to the "proposed" operating budget launch in February and there were various strategies on Page 15 to balance the budget.
http://www.toronto.ca/budget2010/pdf/op2010_presentation_budgetcom.pdf

The Province gave powers to the City to raise revenues. Looking at the housing sales in 2009 to 2008, it would appear a lot of people want to live and buy property in Toronto and can afford the land transfer. Many readers may notice it wasn't necessary to shovel snow this winter. Does Miller control the weather or has to budget based on previous year's pattern.

Side note: Paul Martin used to always post higher than projected surpluses and how did the liberal media treat him. Miller was punished because the upset media speculated rather than reported the fact. Some reactionaries think it is incompetence for adjusting to new information.

How did Paul Martin turnout as PM? Will the provincial liberals be on budget later this month? The proposed operating budget for the city will go to council for a vote: April 15 & 16.

[Anthony Novac]

Sonny, I think your point on Martin is excellent. I had tried to make a similar point by saying there was some political sense to under-promising and over-delivering. I'm not sure I get your point re my cynicism though. I just quickly looked at the doc you linked. It appears the City suggested there was $22m in potential revenue from "Interest and Investment Income, Parking Authority and Third Party Sign Tax" combined. Yet, I say again, less than one month later the "Investment Income" number rises to $100m+? I suggest my suspicions here remain valid.

[Sonny Yeung]

Anthony; people are making Real Estate deals because the BoC will be raising interest rates in July. The prime is currently 2.25% and will be 1% by next year. Up to 6% in a few years. Lastly, Flaherty changed the terms down from 35 years and will require more of a down payment in April. Which could explain the additional activities in sales and land transfers.

I am always amused by the belly achers threatening to move out of the city. They should sell to some families who want to live in Toronto, Miller's "socialist" council will collect more from the land transfer...

[Sonny Yeung]

I meant 1% higher next year regarding the prime.

[Transity Cyclist]

Well, $100 Million found is $100 Million found, why should it be unannounced? I honestly don't see the bad news in this.