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The Useful Hole
We may have to raise taxes we just froze to replace taxes we just axed to alleviate the apocalyptic financial shortfall we face every year that we just deliberately made worse.

Summer is here! Who wants to talk about the municipal services review? Anyone? Anyone? Bueller?

Let me try this again. “Municipal service review” is a code for a set of slightly more interesting questions, like “Do we need a zoo?”, “Should we privatize the police?”, “Do you care if community centres are run by private corporations?” and “Libraries: What’s up with that?”

In perilous financial times, these are questions of import. The city is in a financial hole, a great big three-quarters-of-a-billion-dollar hole of conveniently obscure origins. Programmes are about to get cut. Consultants have been called in. And those consultants want to know what you think!

A series of live consultations is being staged around the city, and Torontonians are being urged to fill out an elaborate questionnaire, available online and off. At the city’s consultation website, you can even download a guide to hosting your own service-review consultation session, a sure winner for anyone looking to follow up on their Windows 7 launch party.

Citizen consultation is a wonderful thing. Well-informed laypeople can make great decision-makers, especially when the background is laid out properly, and the results have some binding impact.

It’s just an inkling, but this might not be such a case. Never mind the fact that Rob Ford’s political operation put out the call for his supporters to stack the limited-attendance public consultations. (Though, as the Star reported, the tactic appeared to have little effect.) Instead, take a moment to look through the online survey.

Written with a minimum of context and a dollop of language that looks like it came straight from the mayor’s office — how do you feel about “Fair and affordable taxes” and “Transparent and Accountable Government?” — the whole thing boils down to a survey on contracting-out.

Presented with a long list of city services, respondents are asked whether the service should be provided by the City, contracted out, or one of two flavours of “I don’t care”: “I don’t care as long as it costs the City less,” and “I don’t care as long as the quality is good.”

Since proponents for contracting-out — namely, the people who will be interpreting this survey — believe that the private sector delivers better service and a lower cost, this questionnaire effectively provides three ways to vote for privatization and one way to vote for public service delivery.

Then there’s the premise for the review itself. As the first line on the service review website tells us, the city is facing a budget shortfall of $774 million. Holy mackerel!  What an enormous financial hole the city’s dug itself!

Let’s take a minute to talk about holes.

The first thing the survey (like most news stories) isn’t telling respondents is that Toronto faces a budget hole every year. It looms in the sky every year, yawning for six or seven months, like some angry seasonal god demanding sacrifice.

The problem is chiefly structural: The province makes the city provide a bunch of services for its citizens, like social services, police, fire, and transit. However, the province doesn’t give the city the taxes it needs to pay for this stuff.

Does this make sense? No. It is the legacy of the deficit-busting 1990s, when the federal government cut transfers to the provinces, and a cash-strapped Ontario turned around and shafted its cities, making them deliver services it had previously helped fund.

So every year, Toronto’s budget people look at the books and say, “there’s no way we can pay for this,” because there isn’t. They come up with a number, and budget-hole season begins. Dire press releases go out proclaiming the enormous budget gap the city is trying to plug. Half a years’ worth of newspaper articles fret over the situation. (2008: $575 million hole! 2009: $689 million hole! 2010: $382 million hole!)

Ultimately, the budget hole gets plugged by some last-minute expedient. Sometimes the province comes up with a “one-time” bailout. In David Miller’s last year, slightly mysterious additional revenues appeared on the scene just in time to plug the gap and leave a surplus. But no matter. The hole gods were pleased! So the city survives another year, and we start again.

Now, a hole is a useful thing. In the Miller years, the administration would bang the drum about the budget hole as a way of trying to shame the McGuinty Liberals into fixing the downloading mess.

Rob Ford, meanwhile, seems even more enamoured of the hole. He scrapped David Miller’s vehicle-registration tax, worth about $64 million, and is gunning for the land-transfer tax, worth upwards of $300 million — though both of these were part of his election platform.

Less defensibly, he froze property taxes, counter to an election pledge, not even matching inflation and putting the city over a financial barrel. Now, the endless news stories about our giant hole are proof positive that the city is bloated and wasteful, and needs to contract out everything that’s not nailed down.

The service-review survey blithely tells us that “in order maintain these service activities, the City may have to raise money through property taxes or user fees.” (These are the only two taxation options provided.)

The whole thing is insane, in a relentlessly logical kind of way. It offers the solutions its framers want to pursue to a solve a crisis they had a hand in creating. Toronto! We may have to raise the taxes we just froze to replace the taxes we just axed to alleviate the apocalyptic financial shortfall we face every year that we just deliberately made worse! What shall we do? Feel free not to care!

I hope it’s not too cynical to suggest that this feedback is going to be ignored as earnestly as it was solicited, especially if it proves to be inexpedient. But maybe ignoring the results of this one is the best thing to do, either way.

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