National Post (Latest Edition)

$650M re­serve spent, city flirts with ‘dis­as­ter’



With Toronto’s wel­fare caseload ex­pected to surge, a for­mer bud­get chief wor­ries the city could be on the brink of fi­nan­cial “dis­as­ter” by the end of 2009 af­ter raid­ing its re­serves dur­ing the good times to fund suc­ces­sive op­er­at­ing bud­gets.

“My stom­ach turns over when I look at what’s been pre­sented [in the 2009 op­er­at­ing bud­get], what we’re fac­ing,” said Coun­cil­lor David Shiner, chair­man of the bud­get com­mit­tee un­der pre­vi­ous mayor Mel Last­man.

Money set aside for emer­gen­cies has been used up in re­cent years to stave off bud­get short­falls that should have been solved with re­straint, he said.

“Since Mayor Miller took of­fice, he has taken over $650mil­lion out of re­serves, the sav­ings of the cit­i­zens of Toronto that were put aside for rainy days and other im­por­tant ini­tia­tives,” Mr. Shiner said.

The city man­ager con­firmed the cup­boards are now bare.

About $300-mil­lion was taken from var­i­ous sta­bi­liza­tion funds to plug a $697-mil­lion hole in this year’s pro­posed $8.7-bil­lion op­er­at­ing bud­get.

In­cluded is the last $8-mil­lion in Toronto’s wel­fare re­serves, which will be paired with a $15-mil­lion sur­plus, due to lower need, from the 2008 pro­gram to fund, in part, a $33-mil­lion wel­fare in­jec­tion. The in­crease is be­ing made to cover an an­tic­i­pated jump in the wel­fare load to 100,000 cases by the end of 2009.

“There is lit­er­ally noth­ing left in that re­serve for the On­tario Works wel­fare pro­gram,” city man­ager Joe Pen­na­chetti told re­porters on bud­get day. “There is no longer any more re­serve.”

The pro­posed op­er­at­ing bud­get for Toronto Em­ploy­ment and So­cial Ser­vices for 2009 is $318-mil­lion, up 15% or $43-mil­lion from the pre­vi­ous year. Of the new money, $33-mil­lion is for a spike in de­mand, from 76,000 last year to an av­er­age of 90,000 a month through­out 2009. The re­main­ing $10-mil­lion was to fund a leg­is­lated in­crease in ben­e­fits.

But the wel­fare re­serve is not the only sav­ings ac­count that is empty.

“We vir­tu­ally have no re­serve,” said Mr. Pen­na­chetti. “All the other re­serves are cap­i­tal or ded­i­cated re­serves.”

Af­ter go­ing through a decade of good times, Toronto is in worse shape fi­nan­cially than ever, Mr. Shiner com­plained.

“The prob­lem is we’ve never yet de­liv­ered a bal­anced bud­get,” he said of the stop-gap mea­sures, new taxes and one-time fund­ing sources that have been used to yank Toronto from the brink of a pro­jected deficit it is not al­lowed to run. “It seems we have an Amer­i­can-style bud­get: spend, spend, spend, bor­row, bor­row, bor­row and worry about it to­mor­row. Well, to­mor­row is here.”

But Coun­cil­lor Shel­ley Car­roll (Don Val­ley West), the city’s bud­get chief, said struc­tural prob­lems in the shared cost and ad­min­is­tra­tion of the wel­fare pro­gram with the prov­ince are in large part re­spon­si­ble for the de­ple­tion of re­serves. Those are grad­u­ally be­ing reme­died, she said, with the “up­load­ing” of On­tario Works to the prov­ince.

A re­port is­sued by TD Bank Fi­nan­cial group on the eve of Tues­day’s city bud­get warned that will hap­pen too grad­u­ally to spare Toronto dur­ing this re­ces­sion.

The TD anal­y­sis warned the wel­fare caseload could surge by 20,000 cases over 2009, pos­si­bly re­quir­ing $65-to $70-mil­lion more from the city to meet de­mand. The load cur­rently sits at 81,000 cases.

Ms. Car­roll said the city did in­cor­po­rate those pro­jec­tions into its bud­get.

But Toronto’s fo­cus with this bud­get is main­tain­ing pro­grams, ser­vices and spending to keep peo­ple off of so­cial as­sis­tance, Ms. Car­roll said.

“We don’t want to put peo­ple on wel­fare rolls,” she said. “What we’re do­ing, and this is a dif­fer­ent ap­proach to re­ces­sion than has ever been taken be­fore, is keep­ing this a strong and func­tion­ing and de­sir­able world mar­ket city. Now is not the time to make your­self a city that is at­trac­tive to no one… We didn’t do that last time and we spent 10 years of ex­cel­lent eco­nomic en­vi­ron­ment in the globe, not be­ing a No. 1 city.”

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 ?? NA­TIONAL POST FILES ?? Re­serves are gone, city man­ager
Joe Pen­na­chetti says.
NA­TIONAL POST FILES Re­serves are gone, city man­ager Joe Pen­na­chetti says.

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