Letter from Councillor Del Grande regarding the Land Transfer Tax

I have received a number of duplicate messages demanding that the Land Transfer Tax be removed.

I cannot answer each and everyone personally but I too have to standardize my answer.

The City has a structural financial problem. In the last administration the answer was to look for "funding tools" which meant more taxes. These included the LTT, car registration tax, billboard tax, new water tax, new garbage tax, new user fees.

Every time one of these was introduced people screamed that they found them unfair.

I too find them unfair and do not support a double taxation and I especially am concerned to use it as a means to continue to have spending dependent upon it.

So, we started with the removal of the car registration tax because I see the Province using this to pay for transit. The cost was 50 million which was difficult but we managed by reducing spending to provide a 0 tax increase in 2011 and a 3% increase in 2012 slicing hard in spending.

Council did not have the fortitude to do the things that needed to be done and added back spending in 2012.

I wanted to reduce the LTT by 5% each year but I found that our spending is tied into this revenue which will cause us trouble once building activity slides.

I also have a capital debt of 3.2 billion which will rise to 4.1 on expenditures determined by past decisions. This does not include 700 million that is required to purchase the street cars that were unfunded ( the order was cut back to the minimum, each cost 6 million)

So, I embarked to sell Enwave and other City land holdings and when this was done Council wanted to spend it on other priorities.

I also find that 2014 is going to be very hard with FED/PROV funding ending and our reserve base to fund programs is gone. I cannot then ask in 2014 to put the reduction in LTT back to cover the 2014 problems that are coming.

People want things and do not want to pay for them or have others pay for them.

Toronto enjoys the lowest property taxes- 25% less than anyone and provides all kinds of benefits for FREE that other communities do not.

We have the highest Business taxes and to keep jobs that must occur but even with this wish it is difficult to do.

So, I have not been twidling my thumbs when you consider that a 2% increase in operating spending of 9 billion cause a demand for $180 million and a 2% increase brings in 46 million you can see we have a structural deficit.

The LTT only helps to delay the day of all Torontonians facing all the realities including the back log in transit, roads, parks etc which are each worth billions not to mention pensions and sick leave.

I also know that we have the lowest development fees which is providing this growth to the City and real estate sales have been strong.

The City is not just about LTT, it is about what you get when you live in the City even though we all cannot afford it.

Thank you.
Councillor Mike Del Grande

Budget Issues in Brief

Excerpted from the Fall 2011 Newsletter:

Budget Issues in Brief
I have outlined a few points below to help you understand the City's financial situation:

• Each year the City's costs rise by $200 million, just to cover inflation and payroll costs
• Each 1% increase in your property tax brings in $21 million in revenue for the City. To cover the above $200 million alone would require a 9.5% property tax increase.
• Even if Council did not spend a single cent this year, our debt - caused by the previous mayor's spending - would climb from $2.5 billion to $4.3 billion.
• By 2014, the annual cost to service this debt will rise from $430 million to $620 million.
• Half of our $9.3 billion Operating Budget is comprised of wage costs (totaling $4.7 billion). We currently have 53,000 people on the City's payroll.
• The City's Budget for 2012 has an opening shortfall of $774 million which is a significant amount. If we were to use tax increases alone to account for this, we would have to increase property taxes by 36.8%.
• Unfortunately, businesses are moving out of the City of Toronto into the 905 areas (Markham, Mississauga, etc.) as it is cheaper for them to operate outside of the 416 area. This also puts pressure on our budget.

Budget

Governments around the world face large budget deficits, some of which are structural. Addressing them will require significant fiscal and operations changes within governments. (Source: Mowat Centre and the School of Public Policy and Governance, University of Toronto)

Toronto is not alone in having the same challenges. That is why for the 2012 Budget we will be having a full Operational and Capital Review of what we do, why we do it and importantly how to pay for it.

As Budget Chair, I have directed that we have the discussion of reviewing our expenditures and revenues in a way that has never been done. Standing Committees will need to review and prioritize what is important and how much our money will allow us to spend.

It is not business as usual because we have a $774 million dollar shortfall which has been structural. We will look at spending and revenue and the levels of service that we provide.

We will also have to examine shedding assets to create an income base to offset the $450 of interest and principal costs per year.

As wages comprises 50% of our costs, we will have to examine what is the best way to deliver services that we can afford. Some of our contracts have wording that reduce management's right to manage. Employees play a big role in the life of the City but government employees have been sheltered through the recession and it is difficult to meet the continuing demands for more. Out sourcing will be considered as part of the exercise.

Public consultation can take place at standing committees, town halls, e-mails, deputations and any other vehicle for input.

It will be a change and for some change will be difficult but we cannot do nothing. Our shortfall must be addressed.

Toronto's $2.8-billion Doomsday Clock is ticking (The Globe and Mail)

Reprinted from The Globe and Mail, October 3rd, 2009:

“Councillor Mike Del Grande, an accountant by training, calls [the city's benefit liability] a 'ticking time-bomb.' He argues that while everyone gets excited about the mayor and the $200-million, they are missing the real story: The city’s failure to grapple with its soaring liabilities.”

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