Coun. Murray Martin had it right when he suggested Woolwich aim for zero in choosing a tax-increase target for 2010. Of course, that would still mean a two-per-cent hike, the amount earmarked for a special levy to fund recreation capital projects.
Initial budget discussions held this week indicate council is likely to maintain the status quo, looking for an additional two per cent, assessment growth and stimulus programs to keep the cash flowing. As we’ve noted before, that stance only delays the inevitable, as cuts are coming.
Driven by the recession, the federal government is throwing around billions of dollars for infrastructure projects – though it can be argued there’s more talk than money, with some reports saying less than 25 per cent of promised cash has reached its targets – as is the province. When the economy picks up, that tap will be shut. Then both governments will begin cuts to address soaring deficits. There will be less cash for municipalities.
In the longer term, local governments will have to tame out-of-control property tax increases, while tackling aging infrastructure such as water and sewer pipes, roads and bridges. It’s these hard services, some of them essential, that will be the priority, forcing cuts to soft services such as recreation and social services.
In the end, staffing is going to be a key issue. Labour costs make up more than 50 per cent of the budget – significant savings will come only with cuts here. There’s no need to be draconian, but wage and hiring freezes as well as attrition are likely to be required to get spending back in line.
Governments of all stripes have been guilty of unnecessary bloating, taking on more and more functions without thought for the long-term implications. There is also a tendency to forego reviews of programs and spending to see if each item is still needed – once instituted, they become entrenched and part of each year’s baseline.
The argument is made that the public has come to expect the level of service now offered, plus, of course, whatever new addition is contemplated, which will become next year’s status quo. Certainly the public can sometimes be unrealistic: we can’t have both more program spending and lower taxes (unless we’re willing to follow the U.S. model of ever-increasing deficits).
More and more, however, we’re seeing higher costs – i.e. taxes – without any commensurate increases in the level or quality of service. At best, we’re paying more for more of the same.
This is the heart of the conundrum that must eventually be addressed: public sector spending is outstripping the productive sector’s ability to pay. As the former depends entirely on the latter, the gap must inevitably cause upheaval as we question the value-for-money scenario: what are we getting for the cash we pour into the system? And how often can governments keep going to the well before it runs dry?
At some point, local politicians will have hard decisions to make. Not just how to keep increases to two per cent, but how to cut by many times that amount. In the long run, the system we’ve developed is untenable, but the crisis will come long before that. A series of hikes that drove property taxes and fees to egregious levels leaves no room for hitting the beleaguered residents with still more taxes to make up the shortfall. The only recourse will be to begin cutting staff and programs, sustaining only those services where taxpayers see actual value for their money.
Before the crunch comes, politicians would be well advised to begin scaling back now.