City of Toronto draft 2012 operating budget
Much to the surprise of many city residents, the city of Toronto will be spending less than they did the previous year. In his speech, the mayor explained the reasons for cutting back on the cities expenses this forth-coming fiscal year due to the mass wastage of revenue the city was incurring. The new budget cut back the city’s spending by $355 million from the previous fiscal year. With the city still recovering from the 2009 recession, there was need to cut down to reduce the rate of out of control spending the city was incurring. This was done so by bring to an end the waste in the city, curtailing on the expenses and increasing on this coming year’s property taxes. This was meant to raise the revenue needed to meet the operational and sustainability needs of the city (Lerner & Josh 21).
To make the new budget sustainable and affordable, various measures are adopted to be able to suit to the city’s needs. In terms of sustainability meant that assets that were in use had to be constantly repaired and maintained in a state that they could still be useful to the city’s operational needs. Old assets that were not operational would be destroyed or sold to reduce the city’s debts or be re-invested in a more subtle venture.
Monetization would be appropriate as way of generating capital. Any new asset in the city is only acquired if there were an urgent need and would seek authorization from a much higher office. There was a need for proper management of debts and which would only be used for long-term assets. The city cut back on its borrowing and relied more on cutting back on operational cost reducing the number of hired staff and increasing the people’s taxes so as to finance the deficit in its budget during the year. The city bank’s lending rates to the government were still high which led to high debts for the city of Toronto, hence the need to reduce internal borrowing (Albo & Gregory et al 35). By doing so, the budget was more localized and strategized to meet the city’s expenses without putting too much concentration on investing instead of concentrating on using the capital raised to finance the city’s operations. Maintenance of excess capital is required to achieve sustainability and meet future obligations and any likely future occurrence expected by analysts should be planned for properly (Beth 24).
According to analysts, the city come 2012 financial year had to cut back on a lot of expenditure, strictly follow the requirements of the budget and avoid activities that added little value in helping the city generate revenue. Through this way, the budget was therefore, feasible and more practical to apply though they would be operating on a tight leash. The new property taxes had to be realistic, affordable by the middle-income earners and competitive within those cities that occupied the 905 area code (Beth 37). To continue earning taxes, the city had to make sure that businesses were still competitive and earning profits. This would be done by ensuring that the property taxes fixed on residential and non-residential properties are rebalanced at all times. There is need to ensure that user fees within the city is competitive and the subsidies given to businesses should be transparent. The necessary increase in taxes made should not exceed the current inflation rates and should be in line with the business operating costs (Bromley 43). Programs meant for income support among the citizens should be funded by income that is revenue based rather than relying on property taxes.
There are however, numerous challenges in achieving the set target. Loss of employment to more than two thousand workers would increase the citizen reliance on the government hence increasing programs meant for income support. Should the revenue from the local income owned by the city not be able to fund this program fully, the city would have to tap into the property taxes. Another challenge would be increasing people’s living standards; this would make life unbearable for most residents, as salaries will unlikely increase.
Increase in taxes means a number of business will have to shut down and major businesses will close off their branches that are not bringing in any revenue. This will entirely affect the set amount of capital collected by the city government. This will increase the number of staff to lose their jobs in the private sector (Curry 33).
Analyzing whether the move to cut down on cost of providing local city services such as reducing the number of library hours and shutting down 35 wading pools to increase efficiency will certainly prove to be worthwhile as the city tries to do more with less. Efficiency in the affected areas is likely to increase as though less time is devoted to it; all personnel will be all on deck trying to achieve set targets with less time than before. Allocation of more machinery to the remaining areas is likely to increase efficiency (Lerner & Josh 53).
There are however, measures the city can take to avoid the cut back from having such a hard impact on the city. Thou one of the plans was to increase transportation cost, they would shelve this action and priorities on looking for fuel distributors that are cheaper. Transportation is an important for any economy to grow and curtailing people’s movement does more harm than good. Due to the increase in property taxes, the city government may provide affordable housing alternatives to reduce that rate of residents acquiring property. Instead of citizens employed by the city government losing their jobs entirely, the staff may be posted to areas that have a shortage of staff to increase the efficiency in those areas (Willard and Heather 26). They may also be employed on short-term basis, this reduces the cost as their salaries will likely be reduced but that would be better that losing employment altogether. Their little salary may still contribute to the economy as they do not entirely have to rely on the city government for food stamps and the likes, but are able to meet their necessities.
Despite the minor setbacks, the motive of the city government was done in favor of all the residents, as cutting back on over expenditure means more funds will be available to fund future projects that will benefit the residents in the end.
Work cited
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