City of Toronto deeper in debt under Mayor Rob Ford
The City of Toronto has gone deeper into debt under Mayor Rob Ford.
The city’s net long-term debt grew by about $800 million in Ford’s first two years of office, 2011 and 2012.
As of the end of 2012, it stood at $3.7 billion, compared with $2.9 billion at the end of 2010, former mayor David Miller’s last year in office.
Over the past two years, the city borrowed $1.5 billion to pay for capital costs and repaid $700 million, thus increasing the debt burden by $800 million.
Ford has championed cutting the cost of government, scrapping the $60 vehicle tax shortly after taking office, and holding down increases in property taxes which are traditionally put toward capital costs, along with borrowed funds.
The mayor’s office didn’t respond to the Star’s request for comment.
In 2011, on Ford’s insistence, the city froze property taxes. The next year he limited the increase to 2.5 per cent, in line with inflation.
About half of the borrowing was to pay for transit infrastructure, such as replacing worn-out vehicles. Other big-ticket infrastructure spending went to areas such as roads, parks and housing.
While growing, the debt is manageable, said Councillor Frank Di Giorgio, the city’s budget chief.
“We’re still a very healthy city as far as I’m concerned,” Di Giorgio said. “I’m not overly concerned at this point. Although we have to keep an eye on things and monitor it, I think we’re fine.”
Di Giorgio noted the city boasts a AA credit rating. And the city remains under council’s debt ceiling, which says the cost of repaying debt should not exceed 15 per cent of property tax revenues.
The city has been borrowing more to pay for new transit rolling stock — subway cars, buses and streetcars, he said. Borrowing levels should taper off in future years.
“We’d already committed to borrowing certain sums of money, and there was no way of avoiding the growth in the debt,” he said. “But it’s going to be curbed.”
Councillor Gord Perks said the city was catching up after a drought in spending on capital items in the mid-’90s and during the six years of mayor Mel Lastman’s tenure, from 1997 to 2003.
Perks noted that Lastman froze property taxes during his first three years in office. During that time, the Toronto Transit Commission was rebuilding 18-year-old buses instead of buying new ones, and the backlog in road repairs was growing.
“We had a mountain of backlog. We were in a profound crisis. Between provincial downloading and Mel Lastman’s tax freeze, we had a giant hole. Now we’re catching up.”
This week’s flooding demonstrates the need for sturdy infrastructure, said Di Giorgio, who on Tuesday was visiting homeowners hit with flooded basements.
“When you talk to people, they’re very irate, and you can’t blame them. They’re really upset that this kind of thing would happen and they blame the city for not having proper infrastructure.”
Borrowing allows the city to do more capital projects each year, rather than put them off to future years, he said.
“To do things quicker, you have to go more into debt. I do think it’s okay to grow your debt a little bit at a time each year, because you do have to replace infrastructure.”
