GOVERNMENTS MUST SEPARATE WANTS FROM NEEDS

OVERSPENT AND OVER BUDGET, the renovations at the Canadian Clay and Glass Gallery in Waterloo are symptomatic of fiscal imprudence that plays out daily in governments – federal, provincial, municipal – across the country.

Repairs to the building, pegged at $1 million, are now to cost some $250,000 more. The periodic repairs are on top of ongoing subsidies and free rent from the city. Nothing out of the ordinary there, as such arrangements are in place in every municipality everywhere. Even Mayor Dave Jaworsky’s laments this week the cost overruns were unavoidable and recourse to explaining the feds are picking up $500,000 worth of the bill are but echoes of similar rationalizations heard daily.

This is not a condemnation of a specific project. It serves, however, as the latest example in trying to make sense of how government finances are often treated cavalierly such that they go off the rails.

Playing the money-from-senior-government card is a staple of local politics. To be sure, funds from the federal and provincial governments allow municipalities to carry out essential projects that might not get done otherwise, or perhaps not in a timely fashion.

Too often, however, the prospect of federal and/or provincial money prompts local governments to greenlight projects of dubious value. Case in point, the light rail transit scheme now causing nothing but traffic headaches in Waterloo Region. The project never did make sense – still doesn’t – but at one point it appeared Queen’s Park and Ottawa would pick up the bulk of the tab. As the senior government money dwindled and the unrealistic budget number blossomed – even the official estimates, which have little to do with the real costs – none of the boosters at the region saw fit to scrap the unwanted plan.

Instead of making a careful analysis of the numbers, regional officials feared losing the money. They were intent on pushing ahead, literally at all costs, no matter how weak the case for light rail transit.

Now, the region is piling on debt, cutting services elsewhere and hiking taxes and fees dramatically to cover the chasm between available funds and the growing costs for the unloved project.

Leaving aside the clichéd but nonetheless valid “there’s only one wallet” issue, these examples shine a light on the crux of why governments often mismanage money and resort to ever-increasing taxation: If they stopped wasting money on useless, ill-advised, unnecessary, limited-appeal and borderline projects, they’d actually have money available for the essentials.

The much-hyped – but also real – infrastructure deficit exists simply because governments can’t differentiate between wants and needs. Why that is has much to do with vote buying, re-election plans and misdirected priorities rather than good public policy.

Politicians need to start with the easy cuts that have no impact on residents while providing extra revenue that can be applied to needs such as the infrastructure deficit. Reduced spending on the operating side will allow the governments to focus on the priorities, hard services essential to the community, while stripping away the bureaucratic bloat and runaway salaries that steal away money from the productive part of the economy.