The city of Toronto continues to face crippling erosion of its much needed social services. This has been shown by the Toronto municipal budget. The budget reveals cuts at the expense of the city’s most vulnerable. Under the mantra of “keeping taxes low”, the city council instead decided to cut public jobs and services which impact the working people of the city. This is further exacerbated by the decrease in funding and downloading from the federal government of major social programs. The Toronto municipal budget and the withdrawing of federal/provincial support illustrates the trend of insufficient funds and declining services that has swept many major cities across Canada in the recent period.
The city council was at a political standstill earlier in the year when they voted on a budget that had a $91-million deficit. However, the impasse was broken when John Tory and his council, with some resistance, were able to defer some cuts by reaching into the city’s savings. Despite this “quick fix”, this “balanced” budget still means erosion of services for the working class, students and unemployed. The wave of cuts to services is directly related to the crisis of the capitalist system. In times of economic stagnation, the government seeks to trim the “fat” and find so-called “efficiencies”. What they do not say is that the “fat” are the poor and the workers, and “efficiencies” are at the expense of everyday people.
Since the budget was released, John Tory has come under some criticism. However he has defended his position, by stating “make a big additional investment in transit somehow gets translated into a cutback, a budget that makes a big additional investment in housing somehow gets translated into a cutback, a $250 million investment in repairs to Toronto Community Housing can in no way be described as a cutback …“. The reality is that these investments represent only a few tiny drops in a large bucket, particularly when one considers the condition in which many Torontonians live. The city of Toronto leads the country with the highest rate of child poverty. Additionally, a recent United Way report showed that there is a massive disparity between the city’s rich and poor, stating that “Toronto is at risk of becoming Canada’s inequality capital.” A study from the University of Toronto’s Martin Prosperity Institute found that the earning gap between Toronto’s billionaires and the general population is the fourth-largest in North America, behind only Mexico City, Seattle and Dallas.
The downloading of funds has steamrolled municipal government budgets and it is the major cause of declining services. This process is not unique to the city of Toronto, but it has been affecting all cities across Canada. What is downloading? It is a series of measures that provincial and federal governments use in order to pass on capital costs, service provision and administrative costs to the local level where adequate funding or revenue streams are not available. This forces local governments to find new funds to support programs without being allowed to run budget deficits. In reality, without new revenue streams, local government must implement cuts that either eliminate programs or simply underfund them.
Where does the municipal funding come from and who foots the bill?
The funding of the $10.6 billion Toronto operating budget comes from two categories. One half comes from the rates, which comes exclusively from water, garbage collection and other waste management, along with Green P parking. This portion of the budget is funded by the majority of homeowners, businesses and drivers. The other half is financed by taxes, primarily the property tax and user fees such as TTC fares.
It must be highlighted that the revenue streams that cities rely upon are inadequate to meet the needs of their residents. Toronto is chronically underfunded, particularly since the Chretien government in the 1990’s decided to download costs from federal revenue streams to the provinces and municipalities. In fact, one of the first actions by Paul Martin, who was then the finance minister, was to cut federal funding for social housing. This trend continued on a provincial level under Ontario Premier Mike Harris, who also downloaded social housing and welfare to the municipalities. This in turn forced municipal governments to rely more heavily on inflated user fees and fines.
Since John Tory took office, the city budget has relied more and more on user fees and fines to subsidize low property taxes. Fees and fines have increased from $463 million in 2015 to $795 million in 2017. This increase does not include the steady increase in TTC fares. On the other hand, one of the major factors that helped alleviate the budgetary crises was the large amount of funds that were collected from the land transfer tax due to record real estate sales.
John Tory ran on a campaign promise to keep property taxes low. He maintained that promise and remained loyal to the affluent residents who reap the most from low property taxes. The property tax will remain below the rate of inflation at two per cent which compared to other municipalities represents the lowest residential property tax rate in Ontario. This of course serves the interest of the wealthy, who own multi-million dollar condominiums and houses in the middle of a housing bubble. Instead, John Tory’s council decided to increase the fares of the TTC, cut public services that directly affect low-income families and the unemployed, and cut front-line support jobs.
Although the “large” investments that were touted by John Tory do seem impressive at first glance, the devil is in the details. When compared to the 2016 budget, funding was reduced to key services. This includes but is not limited to a 2.6 per cent cut to affordable housing services, a 21 per cent cut to Toronto Employment and Social Services, and an additional 2.4 per cent cut to long-term care homes and services. These are the services that the most vulnerable members of our society depend on.
This trend of cuts continued to more urgent services. After some debate, the city council voted to implement cuts to homeless shelters and front-line staff. This has come at a time when most homeless shelters are at capacity. There has been a 13.2 per cent increase over the last year in the number of calls to the central intake line by people looking for beds. On top of that, there has been a tripling of the number of refugees and families seeking shelters. Many activists and some councillors like Joe Cressy from Ward 20 criticize the move. The staff reduction is through attrition, but activists have stressed that front-line staff are necessary to help people get back on their feet. Cressy continued by saying “shelters are a temporary solution and reducing staff in these shelters is like building a hospital without nurses”. Cutting front-line staff will save the city one million dollars.
Additional cuts have been imposed on public recreational facilities—facilities such as community centres, public pools, camps and arts programs, which low-income children rely upon. Fees for the remaining programs that have not been scrapped altogether have increased under this new budget. These closures are still required even though parks, forestry and recreation received a 0.2 per cent increase in the budget. However, a meager increase is simply not enough! When inflation is taken into consideration, it really amounts to a cut. In 2017, the proposed budget would see user fees for some city recreation programs increase again, adding a 10 per cent increase on top of the 2.3 per cent inflationary increase for instructional programs, including sports and fitness for children and youth. The grants to important Community and Investment Programs such as the Boys’ and Girls’ Club, and the Lesbian Gay Bi Trans Youth Line, remain stagnant, with increases below the rate of inflation. This is a consistent feature of the 2017 budget. The so-called investments committed are chronically insufficient.
The Toronto community housing operating budget is one of the worst examples of insufficient funding. The city’s share of social housing funding is expected to increase from 39.7 per cent in 2014 to over 65 per cent by 2019. Despite the city funds being allocated, the vast majority is used to simply maintain the status quo. The repair and maintenance of tenant homes is significantly underfunded, due in part to almost no financial commitment from the federal and provincial governments. This trend is expected to continue until 2031. Federal/provincial funding to social housing is expected to decline to $261 million by 2019 from $376 million in 2014. The result of this is that 427 TCHC units are expected to be boarded up this year. Again, although funding is provided to creating more affordable housing, it still does not reduce the waiting list for social housing. In fact, the city projects a decrease in the amount of social housing available in 2017 by 1,921 units when compared to 2016.
Some highly-promoted poverty reduction programs will receive an additional $6 million compared to 2016. This allows for 300 new child care subsidies; however, this only makes a small impact considering that there are over 17,000 children waiting for subsidized child care. Additionally, the program has to fund student nutrition programs, Toronto Public Library Services, and support for community organizations that provide HIV prevention, harm reduction, and child and youth resiliency programs. However, the $6 million is significantly below the $75 million that community groups originally called for.
Toronto Transit Commission (TTC) fares will increase for the sixth consecutive year at a rate greater than inflation. Fares will increase 10 cents on all non-cash single fares, which is a 3.4 per cent increase. This increase does not guarantee fixing the inadequate air conditioning on subways. The TTC budget also does not include funds to improve track, signal and traction power reliability, the track safety plan, or staff training to provide service in stations. Despite the increase in fares, no one should expect better service. Instead the TTC has been forced to make service cuts to several routes, which will cause additional overcrowding on one-quarter of all buses and streetcars. Even though the budget approves increase funding to transit, the TTC remains the least subsidized transit system in North America. Toronto per rider subsidy amounts to $1.00—that is, three times lower than a city like Los Angeles, and significantly lower than New York City at $1.52USD.
What is required?
Toronto is Canada’s richest city, home to some of Canada’s wealthiest people and a city that holds vast amounts of wealth, yet it is also Canada’s child poverty capital. Despite the wealth that is stored on Bay Street, the city is not able to sufficiently fund the necessary programs and services. City councillors are simply voting on which program or service they are going to take money from in order to fill gaps in another service or program. The investments that are put into the system are only mitigating problems, not solving them.
The reality is, no matter how you distribute the funds or how much you increase the taxes, the resources available at a municipal level are not enough to provide adequate funding for a city like Toronto. To genuinely solve the problem, a large portion of costs must be uploaded back to the provinces and federal government, which possess far greater streams of revenue than cities do. A city council that represented the interests of workers would put these demands on higher levels of government, issuing illegal deficit budgets if need be. Of course, these governments would in turn plead poor. However, there is more than enough wealth in Canadian society to provide adequate funding for cities.
To fight back against declining services and an austerity government, local councils should set a budget in consultation with labour councils, local residents and community groups in order to create a budget that meets the needs of the majority. This is the model that the Militant-led Liverpool city council used to maintain jobs and services in the 1980s. Instead of pushing up rates they fought back and set a deficit budget—demanding that the central government properly fill the gap and fund services. This attracted large amounts of enthusiasm and support amongst residents, which later allowed the council to make big wins, such as large housing construction program. This shows that organized workers’ resistance is the key to protecting services and defeating austerity.
The issue is not the 2017 budget itself; it is simply a symptom of a larger systemic issue. The capitalist system cannot balance the interests of the working class, students, and unemployed with the interests of the capitalists and the wealthy. In these periods, a system that is based on private property and capital will always choose the side of the capitalists and wealthy.
A solution cannot be found in the capitalist system, as shown by a recent Toronto Star report which found that the City is already preparing a budget freeze in 2018. When inflation is taken into consideration, the freeze actually means another budget cut. This is a constant theme in Canadian society. This trend of insufficient funds will continue until we fundamentally change how we manage the wealth of society. It is time to seize the wealth that is being hoarded by the idle rich and start investing in the needs of society. Distribution should no longer be determined by profit but by need. With the wealth that is available there is no longer the need to juggle limited funds off the backs of the poor. Socialism and a democratically planned economy are the solutions to the chronic underfunding of municipal services. Capitalism cannot provide livable cities.
