Municipalities should cut spending instead of targeting taxpayers

jasmine pickel

Jasmine Moulton is the Ontario Director for the Canadian Taxpayers Federation.

Municipal councillors want taxpayers to believe their only option to deal with the COVID-19 budget crunch is to hike taxes or slash programs. The Association of Municipalities of Ontario repeated this false binary in an emergency call for billions in taxpayer cash from the federal and provincial governments. But there’s a third option: cut the fat and focus on the essentials.

It’s not only possible to reduce and refocus municipal spending, it’s better for taxpayers.

Ontario’s municipal per person expenses are higher than any other province’s in Canada. Municipal government spending in most Ontario communities has increased faster than average household incomes, according to analysis from the Fraser Institute. In other words, residents can’t afford to keep up with the growth in their local governments’ spending.

The COVID-19 economic downturn has made this situation worse. In Ontario, 2.2 million people have either lost their jobs or worked fewer hours since the shutdown began. Ontario’s unemployment rate spiked to 13.6 per cent in May, a record high. No one can afford higher taxes.

There are always those who panic at the mere suggestion of tackling government spending, but there are two ways municipalities can rein in spending that would be relatively painless: by cancelling politicians’ pet projects and bringing government employee compensation in line with reality.

Toronto Mayor John Tory said that COVID-19 has left a $1.4-billion hole in the city’s operating budget. While Tory is begging for money, he is also doubling down on his plans for a multibillion-dollar floating park.

Rail Deck Park is Tory’s expensive legacy project that he’s stubbornly determined to build – despite the city’s looming deficit. While the city claims the park will cost $1.7 billion, the Canadian Taxpayers Federation released a report revealing the price tag will likely be at least $3.8 billion, nearly double the size of the taxpayer bailout Tory’s demanding.

Toronto city council also recently spent $6.5 million approving a bike lane expansion during a global pandemic while threatening to make “terrible and devastating” cuts in other areas such as long-term care homes.

A little further down the QEW, Hamilton is another prime example of a city demanding more taxpayer money while spending what it already has on frivolous pet projects.

On the same day municipalities published their emergency call for support, Hamilton city council approved a motion to entertain a pitch to host the Commonwealth Games. In other cities, the cost to host the games has ranged from hundreds of millions of dollars to over a billion. Nonetheless, Hamilton city council is seeking taxpayer help to cover its $62-million budgetary hole from COVID-19 this year.

Likewise, government employee compensation is a prime target for municipalities to rein in excess. Government employees in Ontario earn 10.3 per cent more than those in comparable positions outside government, according to a report by the Fraser Institute.

Municipal government employees should help shoulder the economic burden of COVID-19 and take a pay cut. The vast majority – 87 per cent – of job losses took place outside of government. With fewer working outside government, there’s less tax money to pay the inflated compensation of those working inside government.

In 2019, Hamilton had 1,849 municipal government employees on its sunshine list, earning over $100,000 per year. That’s a 459 per cent increase from just 10 years prior. The city of Toronto had 6,805 government employees on its sunshine list in 2019, a number which more than tripled in 10 years. Boards, agencies, and commissions report their numbers separately, so their sunshine lists are actually much longer.

Taxpayers are struggling right now and can’t afford to hand more money over to governments that refuse to save. Ontario municipalities should reduce spending instead of demanding more taxpayer money.

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