On Ontario's Surprise $2.3 Billion Surplus

Greg Sorbara

You would think that I’d be happy to learn the news that the province of Ontario ran up an unexpected surplus of $2.3 Billion last year. And it is good news. It should put to rest suggestions that our fiscal house is not in order, and it should settle concerns, at least temporarily, that we’re somehow losing our grip on being a “have” province in confederation.

But unexpectedly, I find myself miffed. Perhaps because the $2.3 Billion surplus is a sign — if any was possible — that the province has its house too much in order. How can we have a $2.3 Billion surplus in Queen’s Park when the City of Toronto finds itself $575 Million in the hole? How can this province justify running a surplus when every municipality in Ontario finds the downloaded social services onerous to pay for?

And, more importantly, how can any provincial politician or columnist deride the proposals from various municipal politicians, or from leader Howard Hampton, to upload these social services off the property tax base back onto the income tax base? Particularly when, as it comes to Ontario taxpayers as a whole, the transfer is revenue neutral. Particularly when Ontario’s municipalities find themselves so cash strapped, and Queen’s Park finds itself flushed? Royson James predicted that Howard Hampton’s proposed transfer was fiscal madness at $3.6 Billion per year in extra provincial costs. Well, last year’s real budget plus this puts us only $1.3 Billion short — close to but less than what the Liberals predicted the deficit would be last year.

I honestly don’t know why I should be miffed, however. The Federal government has been running surprise surpluses since 1997, and I was never upset, unlike some bloggers. There, I lauded the government — Liberal and Conservative — for being prudent with its revenue predictions, for paying down previous debts and reducing the burden of interest payments on that debt.

But I suspect that the so-called “fiscal imbalance” between the flush federal government and the cash-strapped provinces didn’t seem nearly as real to me as the fiscal imbalance that exists between the provincial governments and municipalities. The McGuinty government has suddenly found almost $3 Billion in the folds of its couch when the City of Toronto considers slashing already-underfunded TTC service and police officers — and this after the provincial government spent madly last year (including setting aside $700 million in trust to fund the York University subway extension) in order to keep their books in deficit until a more opportune time (like, say, an election campaign) to announce a balanced budget.

I suspect, with the Federal government, there wasn’t as clear a sense of where the surplus money should go, save for paying down the substantial credit card bill we as Canadians had run up for the previous twenty-four years. Now, however, McGuinty has cash and the Municipalities do not. And as the constitution says that municipal affairs are a provincial responsibility that provincial governments delegate at their whim, this surplus is as clear as any indication that the McGuinty government is not spending the money it should to ensure that our trash is picked up, that police officers walk our beat, and that our buses and streetcars are clean and frequent.

Paying down Ontario’s debt to the tune of $2.3 Billion is nice, but to my mind that money belongs to the municipalities of this province, and McGuinty isn’t doing his job.

Over to You, John Tory

Now that Howard Hampton has an unexpected surplus to back up his proposed $3.6 Billion tax and spending transfers between the provincial and municipal governments, and given that Dalton McGuinty has his public transit plan and his proposed revision of provincial-municipal fiscal relations to come on Monday, all eyes should be turning to John Tory.

Sir, you have spoken persuasively about the need for provincial assistance for our cash-strapped municipalities. You have talked in terms of the Harris downloads being a mistake. You’ve said nice words. Now is the time for details. What funds will you transfer, what responsibilities will you assume, and when?

Toronto doesn’t need another government review. Toronto faces a $575 million shortfall now, thanks largely to provincial neglect. What Toronto and municipalities across this province need, right now, is a cheque.

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