Lawrence Solomon: Fix Your City – KPMG cuts are merely cautious

(July 29, 2011) Few taxpayers would notice any diminution of service.

“Even if city council votes for a fraction of the several hundred millions of dollars in suggested cuts, the cuts suggested by city-hired consultants KPMG could transform the city,” the Toronto Star warned last week in an article about proposed budget cuts under Toronto Mayor Rob Ford.

Added Gord Perks, a municipal Councillor and Ford critic: “These cuts would change Toronto from a city that is great to live in to a city that no one would want to live in.” Hundreds of Torontonians turned out to City Hall Thursday to plead with Mayor Ford and the rest of city council to spare city services.

In fact, the potential cuts that KPMG laid out are just what you’d expect from a consulting group inspired by accountants: cautious and uninspired. If Mayor Ford adopted most of the cuts, few Toronto taxpayers would notice any diminution of service, some would see an actual improvement in service, and all would benefit from a lower-taxed, more vibrant city. As an added benefit, Torontonians would learn lessons in independence and responsibility.

Many of the KPMG cuts fall into the spoonfeeding category. Does the Toronto municipal government really need to take animals to the pound when owners tire of their pets? Or to run a “toxic taxi” service to pick up paint cans from residents unwilling to dispose of them on their own? Or to send cleanup crews out after neighbours or local businesses have a street party? Or to perform any number of other conveniences — from running an employment agency to providing daycare — that the private sector does more efficiently and at lower cost?

Other cuts involve hard services in industries that are normally in the private sector, and that would bring in billions if KPMG recommended privatization, rather than trims around the edges. The city does not need to be in the parking lot business, or the electricity business. It does not need to own theatres or golf courses.

Torontonians have become so used to being spoon-fed that they no longer discern when they’re being fed bad medicine. Take the city’s 70-odd Business Improvement Areas, one of the many items that the KPMG consultants singled out for cuts — reluctantly so, because KPMG assumes that BIAs promote industry at little cost to Toronto.

KPMG’s mistaken belief is understandable because BIAs seem benign — they are mostly retail shopping strips several blocks long that are run by local boards elected by local businesses from each area, and that tax themselves based on the assessed value of their properties. To KPMG and many others, this sounds nice and democratic and worth the subsidies that the city provides to help the businesses decorate their streets in local themes and advertise themselves across town. But beneath the surface, BIAs are anything but nice.

Consider a mixed neighbourhood strip with a minority of businesses that caters almost entirely to the neighbourhood (a supermarket, a hardware store, a drug store, a local office building) and a majority of businesses that relies on customers from outside the neighbourhood (restaurants, clothing stores, specialty shops). Under a BIA, the businesses in the majority can and do gain control over the BIA, and then use BIA assessments to fund advertising campaigns to attract customers from outside the neighbourhood. In some cases, where the businesses in the minority have especially valuable real estate, they can pay 75% or more of the BIA’s entire budget.

Works great, if you aren’t one of the businesses forced to pay the better part of an expense that provides you with no benefit. Over time, you will be squeezed out, to be replaced by more of the majority-type establishments that benefit from the expense. Or if you aren’t one of the residential customers that now must drive to a distant Home Depot because the BIA bankrupted the local hardware store. The effect of BIAs has been to homogenize the retail strips of neighbourhoods for the benefit of the businesses left standing.

In the same way that BIAs homogenize retail districts, city planners homogenize residential neighbourhoods by enforcing uniform rules that lead to cookie cutter conformity. Cities need to breathe, free from the tangle of red tape and the weight of government bureaucracy.

Toronto residents, fearful of cuts to the city’s budget, have warned of danger to the fabric of the city. The best way for the Ford government to protect that fabric is to stick to its knitting by discarding services that aren’t core to city functioning.

Lawrence Solomon is executive director of Energy Probe and Urban Renaissance Institute and the author of Toronto Sprawls (University of ­Toronto Press).

To see KPMG’s timid proposals, click here and here.

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About Lawrence Solomon

Lawrence Solomon is one of Canada's leading environmentalists. His book, The Conserver Solution (Doubleday) popularized the Conserver Society concept in the late 1970s and became the manual for those interested in incorporating environmental factors into economic life. An advisor to President Jimmy Carter's Task Force on the Global Environment (the Global 2000 Report) in the late 1970's, he has since been at the forefront of movements to reform foreign aid, stop nuclear power expansion and adopt toll roads. Mr. Solomon is a founder and managing director of Energy Probe Research Foundation and the executive director of its Energy Probe and Urban Renaissance Institute divisions. He has been a columnist for The Globe and Mail, a contributor to the Wall Street Journal, the editor and publisher of the award-winning The Next City magazine, and the author or co-author of seven books, most recently The Deniers, a #1 environmental best-seller in both Canada and the U.S. .
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