I take back some of what I said in this post. Toronto Star columnist Royson James redeemed himself considerably with this post debunking the myths surrounding Toronto’s fiscal crisis. He takes on six inaccurate assumptions, and doesn’t pull his punches for anybody. Mike Harris fans should take comfort in the fact that James notes that Harris isn’t the source of all of Toronto’s current problems (the roots date back to his predecessors Rae, Peterson and even Davis), and there have even been some benefits to the Common Sense Revolutionary’s time in office. Go read the whole thing.
But one of his debunks (if I can use that term) is still wholly inaccurate. It relates to the supposed benefit of Mike Harris uploading the costs of education, thus saving Toronto property taxpayers over $500 million. That simply isn’t what happened.
So, I figured, enough grousing on my blog; let’s write Mr. James an e-mail. And this is what I wrote.
Re: Debunking the myths of Toronto’s fiscal woes
Wednesday, August 22, 2007, 9:11 PM
Dear Mr. James
I appreciated your column today debunking the myths of Toronto’s financial crisis, but I think you got one of them wrong. You wrote:
As part of the services swap in 1998, the province assumed $565 million in education costs that Toronto used to cover out of property taxes. Instead of having to reduce its tax rate, the city was given the “tax room” to spend the savings on other municipal services. That’s still the case today.
There are several problems with this statement. First of all, the education costs that Toronto used to cover out of property taxes were not charged by the City of Toronto, but by the Toronto District School Board, which was in many ways a separate level of government that, until Harris came along, had a fair amount of power to go with its responsibility. To suggest that by uploading these costs to the province saved Toronto City Council money is a mistake.
At best, city council could only have benefited from these savings by explicitly raising property taxes to cover the “tax room”, and do not forget that Mike Harris prevented the City of Toronto from doing that. By provincial edict, city property tax hikes were capped at 3% per year, with commercial tax hikes capped at half that rate. This cap was only removed after the Eves government fell from power.
Finally, I don’t know how it is with your tax bill, but the provincial upload of costs has proven to be effectively meaningless throughout the province. I’m paying for my education costs out of my property tax bill. The amount is determined by the province through a complex formula, but from my neck of the woods, education has not moved onto the income tax base by any stretch of the imagination. If this is the case for Toronto, city council would have had even less tax room to cover the “upload”, since the property taxes would still be there — and the city’s tax increase would be very visible on the property tax bill.
As an example, witness this document on the Ontario government’s website, describing the provincial government’s announcement of business education tax rates for broad commercial and industrial property classes for 2004:
Finally, there is still that pesky $120 million levy imposed by the Harris government on Toronto taxpayers that goes to schools outside the city of Toronto — a levy that McGuinty still hasn’t eliminated. Maybe then we could get some tax room.
I think we can agree that the whole downloading kerfuffle has been one big disaster for all the municipalities of the province of Ontario. Not only did Mike Harris ignore the advice of his adviser, David Crombie, who headed the “who does what” committee (who recommended that social services go up and education costs go down), it was clearly implemented in a very haphazard way.
We used to have an education system that, while expensive for local taxpayers, was still responsive to local voters. Now, our education system is managed from Queen’s Park, but with vestigial trustees who are elected to do mostly nothing, paid for by property taxes that are not set by municipal councillors. It would have been better if education were fully uploaded to the provincial level. The problem is, it hasn’t been, fully.
We’ll see if he responds (I doubt it; he must get a lot of mail).
(Update: Friday, August 24, 8:51 a.m.): I should have posted this sooner, but I was otherwise occupied all day yesterday. I’ve got to give Mr. James credit as he doesn’t seem to sleep. He replied at 1 a.m. to my e-mail. Nothing major; just one line:
I am right. Even the city documents show the 565 million dollars as an offset against the downloading.
I guess we’ll have to agree to disagree. I still think, when the province is still paying for its education responsibilities by collecting property taxes, the benefit of this “upload” is significantly reduced. Not many people think of property taxes as anything other than a municipal tax, and with the change effectively meaning that property taxes have not decreased, the amount of room available to Toronto City Council to tax into the $565 million provincial upload is extremely limited.
And, again, I should point out that the city’s ability to increase its taxes was severely limited by the Harris administration, who forced city council to keep property taxes at the rate of inflation or lower for almost five years, while at the same time saddling the city with social services costs that could not be cut. The result is as you’ve seen it: a desperately underfunded TTC, police services under stress, deferred road maintenance and dirtier streets and parks.