Zero means nothing...and everything

There was something a little curious about the debate on the affordable housing contribution that I didn’t touch on in yesterday’s blog. That was the vacillating behaviour of Dale Henderson.

He had voted in favour of cutting the contribution to the affordable housing reserves in half when the issue arose at the Strategic Priorities and Policy meeting a week or so earlier. There is no indication in my notes that he actually spoke on the issue at that time. That too is not all that unusual; agreement with a proposal doesn’t necessarily call for an explanation to the public although, in this case, the proposal was not recommended by staff. Martin Hayward was clear that the only reason this item existed in the list was because it was requested by the mayor, not because staff was recommending it. In fact, it was included in a section listed as “Cuts that have service implications and are NOT RECOMMENDED”.

Nevertheless, Henderson voted in favour of the cut without explaining why he saw fit to ignore the staff warning. But over the weekend, as questions began to arise over the direction of the budget, he began to waffle. He didn’t want to be perceived as getting a zero tax increase on the backs of the poor. In an interview with Pat Maloney of the London Free Press, he is quoted as saying "I'm in favor of moving money from somewhere else and getting (the housing) back in (the budget)." Still when the issue came to council on Tuesday, he remained silent and voted in favour of the cut. After speaking so freely to the media only a few days earlier, that was somewhat surprising.

One can only speculate why and how his mind was changed yet again. But an interesting piece of news came my way via altlondon.org in the last few hours. Apparently, just an hour or two before the special committee meetings and the council meeting on Tuesday, Henderson was spied enjoying lunch at the Harmony Grand Buffet with none other than Mayor Joe Fontana, and Councillors Bud Polhill, Stephen Orser, Denise Brown, and Paul VanMeerbergen. Since there were only six of them, not a quorum of council, they could hardly be accused of advancing the council’s agenda, which would, of course, be illegal as it would constitute a private meeting. Still, it raises questions, particularly as those present did constitute a quorum for a couple of committees that would be meeting at city hall immediately thereafter. In any event, Henderson decided to stick with his original vote when it came to affordable housing and those that had populated the gallery to indicate their support for affordable housing were disappointed.

And speaking of secret meetings, another major departure from past budget deliberations was the fact that almost half of the “B” list cuts that council was to vote on were decided in camera without explanation of what they were, who and what would be impacted, and how. That there are probably job losses involved can be deduced from the explanation that these were “matter(s) pertaining  to labour relations and personal information about identifiable individuals, including municipal employees, with respect to employment–related matters” etc. In short, jobs are at stake, whether through attrition or layoff. Over $3M came off the bottom line that way. Councillors weren’t permitted to ask questions about how many jobs, because these are in camera matters.

Several councillors tried. They were clearly opposed to some of these but had difficulty in expressing their opposition given that they could not reveal what had happened in camera.

Nancy Branscombe felt particularly strongly about the issue. When she originally assumed the chair of the Services Review Committee, she had made a point of talking with all the unions to discuss the implication of reviewing the city’s services. She needed their cooperation with the efforts to improve efficiency, and she had let them know that there could be implications for the size of the workforce. But this last minute switch to $1.5M was just more policy-making on the fly. “That upsets me most,” she said. And she couldn’t even ask about how this additional cut would be implemented. That task was being left to staff to figure out as best they could.

Joni Baechler agreed. She pointed out that the original staff recommendation had been for cutting $1M and there had been thoughtful discussion about that. But suddenly, it had morphed into a $1.5M cut without justification. “Don’t worry, I won’t say anything,” she assured the mayor who was about to cut her off. “Don’t get upset about it.” Despite the warnings about decorum, some in the gallery giggled.

Joe Swan had a different recollection about how they had arrived at $1.5; what that was he didn’t say, only that “values were part of the budget.”

But Judy Bryant concurred with the two previous speakers. “$1.5M, I don’t know how that is going to be done,” she said.  “Even in camera I didn’t get the answer. It’s not reasonable that we ask staff to do this at the last minute.”

But done it was. Council voted 8-7 to go for the higher amount in staffing cuts.

By now, they were only a little over a million dollars short of delivering a second tax freeze since they were elected. All that was left was to raid the reserves.

But just before that happened, two more suggestions came forward. Denise Brown wanted to dock the Health Unit another $100,000 and Nancy Branscombe suggested cutting the police budget to the original 3% increase that they had been offered. Brown’s suggestion was endorsed while Branscombe managed to get support from Baechler, Henderson and VanMeerbergen. “Likely only time those 4 ever vote the same way,” observed a Tweeter.

I predicted that councillors would have a bit more appetite for raiding the reserves in general than the specific reserves of AODA and affordable housing, and I was right. Bill Armstrong, who had stood firm on not going after the two former ones since it’s really a bit unpalatable to take from the poor and disabled, supported dipping into the general reserves. It’s easier when you can’t see what you’re doing or hurting.

But six members explained that they could not support using the city’s reserves. There may be $207 million there, but much of it belongs to the boards and commissions and can’t be touched. The remainder represents council's financial plan: they provide a cash flow for projects before the revenues come in; they allow the city to negotiate the lowest interest rates on debentures; they provide a buffer against unanticipated exigencies.

And since they couldn’t support the council’s policy on the fly or its foisting of debt on future councils, neither could they support the budget as a whole.

But Fontana remained unfazed. All this talk about principles; they had principles. Why, they hadn’t even issued all the debt they could issue. “Everybody gets a little buzzed out about this,” he complained. But he was listening to the silent majority. “Is the public going to hurt by what we’ve done tonight?” he wanted to know. Of course not. London doesn’t have a debt problem; it has a “revenue and growth problem.”  Recently he had met with other mayors from Vaughn and other cities. They were growing by 3 or 4 or 5 per cent.  Still, the other mayors were jealous of London’s ability to bring in a zero budget.

"We’ve all achieved a great goal. Let’s take pride in what we have accomplished,” he urged.

As for the future, “We’ve got Soho, we’ve got the southwest area plan, and the 401.” He listed off a number of other dreams for the future. He was anticipating a lot of investment in these by the private sector. Just wait till the fall when Joe Swan’s Investment and Economic Prosperity Committee will make things happen.

But where will the $700M come from? At present, there isn’t even an economic levy to bring in money for projects.

And next year, there will be another expectation of zero. But they will have another year of inflation to contend with, another 15 police officers on the pay roll, an administrative staff that hasn’t seen a pay raise for five years while their workloads beep going up. Much of the current freeze was accomplished by the use of one-time money; what will they use next year? This year assessment growth came in at about one percent; next year it is expected to be lower.

But Henderson couldn’t be happier because he had an answer. Let’s just go to hydro and get them to give us a million dollars, he enthused. And if they wouldn’t, we’ll just hold a shareholder’s meeting and push them. “I move that,” he concluded. He had again forgotten that London Hydro’s money comes from the ratepayer, a.k.a. the taxpayer.

Alas, it was not to be. There was already a motion on the floor, on using the reserves. When that was done, it was time to vote on the budget as a whole.
 

In the end it was clear that the entire exercise was about reaching the magic number of zero. It was what the mayor and others had promised in their election campaigns; it was what they credited with winning office; it was a badge of pride and honour.

Shortly after 1 a.m. the budget passed 9 to 6. Baechler, Branscombe, Matt Brown, Hubert, Bryant and Usher voted no. The mayor got his tax freeze for another year. But no one sang Kumbaya.