The Budget Black Hole

Transit Windsor cuts 

Transit Commission Chair, Councillor Caroline Postma stated that reductions in service as well as a five cent increase in fares could be necessary in 2008.

But I’m a little confused. According to the “Transit Ridership Growth and Asset Management Plan” the Province of Ontario is providing the City of Windsor with a portion of the provincial gas tax revenue:

 With regard to gas tax, Windsor is projected to receive approximately $4,100,000 annually when the full 2 cent allocation is fully implemented after October 2006.

The report recommends increasing transit fares by five cents in 2006, 2008, 2009 and 2010 for a total fare of $2.50 to account for inflation and increased bus service.  The operating budget for Transit Windsor in 2005 was $9.427; in 2006 it was $10.486 million, in 2007 it was $10.9 million and for 2008 – it is projected to fall to $9.8 million.    The city’s contribution would be, according to the study, 2005 – $8.7, 2006 – $8.9, and 2007 – $9.7 million.  And for 2008 it should be $11.9 – roughly what transit administrators are asking for this year.

Therefore, the operating budget should have been, in millions,  2005 -$10.7, 2006 – $10.9, and 2007 – $11.7.  The gap has been increasing each year to nearly $1 million.

Of the gas tax revenue, 50% is to be dedicated towards operating costs and the other 50% towards capital costs, or $2 million towards the operation of Transit Windsor.

Additionally:

“Funding for transit projects from the federal government has been announced, however, the specifics and availability of funding has not been confirmed. Any future announcement would undoubtedly assist the City to fund the recommended capital projects.”

And recall, Mayor Eddie Francis announced on February 24th, 2005 that:

Mayor Eddie Francis said that Windsor expects to receive $4 million in each of the next two years [2006 & 2007], $5.3 million in the third year [2008], $6.6 million in the fourth year [2009] and $13.7 million in the final year [2010] of the agreement, for a total of $25.8 million.  (I don’t know who did the math on that one, but it adds up to over $33 million.)

And back in 2004 he said:

“Transit operations are going to take on a whole new look with this announcement,” said Mayor Eddie Francis, who called the announcement an investment in urban development.

So, just a question – where is all the money going?  Between the provincial gas tax revenue and the federal, Transit Windsor should not have to be cutting service, but increasing it – as Transit Windsor officials had planned.

But what we’re seeing is very similar to what was done with the Windsor Utilities Commission – rate increases have been put on hold, for some unknown reason, and then residents walloped all at once.

UPDATE:  The Transit Commission has announced a 10 cent increase in fares - which is in line with what the study recommended for 2008.

Send the message:  0% tax rate increase

Following a request by city administration that all departments reduce their budget requests by 10 per cent over last year…

Last year’s operating budget was about $761 million.  So, providing for a 3% increase in costs, next year’s budget would approximately be  $784 million.  But adminstration is seeking a 10% cut across the board over last year’s budget. 

That means the budget estimate for 2008 would be about $685 million with the cuts.

But in the Windsor Star on Tuesday we read:

Three municipal tax hike options, ranging from 2.2 to 3.6 per cent, were presented Monday to city councillors during a preliminary overview of the 2008 budget.

Now, I’m no accounting wizard, but if all departments were asked to reduce their budgets by 10% over the 2007 budget year, that would amount to $76 million in extra cash.

So why are we talking about an increase ranging from 2.2 to 3.6% if departments are cutting their budgets by 10%?  Have revenues fallen off in the city by over $76 million?  Or conversely, are expenditures expected to increase $76 million? (A little ironic given the cost of buying out the Detroit-Windsor Tunnel is $75-million, but I’m sure that isn’t it).

Last year tax revenues generated about $310 million for the city coffers and at a three percent increase that would amount to about $319 million (unless tax revenues have fallen).

So is the proposed tax rate increase in addition to the 10% across the board cuts?  That would equal, all things being the same, a combined $85 million! Or has that option been disregarded?  If so, why?  As we saw with the library discussions, and the Windsor transit issue the 10% cuts are still on the table – so what is happening?

Something doesn’t add up here.

But the overall point being, if 10% across the board cuts are a  part of discussions, residents must demand a 0% property tax increase.  And if my calculations are correct, even if they are off we should be seeing at the very least, a property tax freeze, if departments have been diligent in attempting to achieve a 10% cut.