Thursday 20 October 2011

Ford Math and Honesty

The refrain is said often from Team Ford: Toronto needs to take a real look at its numbers. It’s said so often that this is essentially the drumbeat of the administration.

So far, the most notable numbers to emerge are the $774 million deficit and 35% potential property tax hike. What’s particularly notable about these is how disingenuous and stretched they are.

To be sure, the $774 million number was at one point true. But Team Ford steadfastly refused to update it in the light of new information. Instead, they used the original assumption because it suited their purposes rather than reflecting the real change.

Likewise, the 35% property tax canard was conjured out of thin air. Calculated by dividing $774M by the expected revenue a 1% property tax generates ($22M), a 34% number is reached. Of course, it ignores any user fees, real savings and the land transfer tax among other things as John McGrath points out in the above link. So this number is not real either.

To give the benefit of the doubt, let’s say they knew these were fictional but were just using them as props to whip departments to generate real improvements. Sure, they may be playing games now, but that’s only because they want real results.

With that idea, let’s look at the police budget, of which the Toronto Star’s Daniel Dale has provided the best analysis.

The police budget last year was $930.4M, around 85% of that in salaries and benefits. Legitimately, Police Chief Bill Blair had some issues with reducing the department by 10% after a sizable salary increase the Mayor brags about (11.5% over four years).

Now, that police budget process is a long one. There’s a starting point in the spring and they decide on a number and then slowly it gets slightly less after a few proposals. But keep in mind that $930.4M number, the comparison for last year.

The starting point in 2012 was $979M, and through subsequent proposals was lowered to $969.7M, then $944.5M. It’s the latter that the Mayor most recently balked it and it was correctly characterized as a 1.6% budget increase over the $930M in spite of a call to reduce the budget by $93M from the starting point. Finally, the Chief came back with his last proposal, $936.3M. Now you may think this represents a slight increase over last year (0.63%), and you’d be right. 

Here’s how the numbers look:

But that’s not Ford Math. Because in spite of the police spending more money, they claim it’s a 4.6% cut. Ford ally and Police Services Board Member France Nunziata is quoted in Dale's piece as saying, “It’s a huge reduction.” So where do they get this 4.6% cut from? Well, they changed the assumptions because it suits them. Instead of comparing the police budget to last year’s, they compared it to the $979M starting request. Just a week ago this was not the basis for discussion. But now the police give us this work, changing the assumptions, and rather lazily so:
If $979M was the real starting point, why use $93M as the 10% reduction number?

Purely from the negotiating standpoint of reductions and leaving aside value, it would be akin to going to a car dealer and looking at a $20,000 car. You say you want 10% off, or $18,000. The dealer says they want 5% more, or $21,000. You settle for $20,120 because that’s a 4.6% cut from what he wanted, a real deal!

You can feel like you were a good negotiator and sell it to all your friends that way. But really, when you look at your bank account, the savings aren’t there.

Slightly different but related, Matt Elliott takes a good look at the bid process to outsource garbage collection west of Yonge St. The winning bid, Green For Life, sounds promising- it’s only $17M, which is more than $10M less than the previous cost. Matt has a great breakdown of all the numbers, but it begs the question: how is this possible?

GFL outbid their nearest competition by 15%, a huge number when you consider the margins of the business. Their bid also suggests they can collect waste 7.8% more efficiently per tonne than the private collector in Etobicoke, also an eyebrow-raiser. If it’s all true and it’s the same level of service, then that’s great. But are there hidden costs or liabilities? Until we see real results, there are some worthwhile questions to be asked.

Once upon a time, the core members of Team Ford derided the Miller administration for hiding numbers and costs and urged the city to have a real conversation about the budget numbers and value for services. 

You want to have an honest conversation about the budget? Great. But for that, honesty is needed. 

1 comment:

  1. I like the car deal example... good stuff..