Budgeting has its challenges

January 21, 2015   ·   0 Comments

AT EVERY LEVEL OF government, the first part of each year is budget time, and every year tends to bring with it new, and sometimes unexpected, challenges.

This year is no exception, and if you have any doubts about it you need only check with the federal finance minister, Joe Oliver, who may be the first finance minister to find he or she has to postpone their budget because of an unexpected economic development.

Just a few months ago, the federal Conservatives’ game plan for this election year had become pretty obvious. The promise to balance the budget would be fulfilled and there would be all the money needed to hand out election-year goodies in the form of well-publicized grants to organizations big and small along with tax cuts targeting families with a single breadwinner.

But those plans depended on revenues coming in at forecast levels, and those forecasts didn’t include the collapse in world oil prices currently being experienced, a collapse that is likely to cost the federal treasury many billions of dollars, depending on how long it lasts.

Now the big challenge facing Mr. Oliver is to decide which is more important – a balanced budget or maintenance of federal programs, including works projects that will improve our decaying infrastructure with all the attendant economic benefits.

Don’t be surprised to find that with the election so near we’ll wind up with a compromise of sorts, with a budgetary balance that will turn out to be illusionary.

And speaking of illusions, we think another is to be found in the Ontario Liberal government’s long-term projections showing a balanced budget by the end of its current term.

Faced with a current deficit of about $12 billion, and experiencing an inability thus far to achieve necessary agreements with public-sector unions or even the Ontario Medical Association, the Kathleen Wynne administration will be hard-pressed to come up with a budget that’s any more realistic than the one produced by Stephen Harper’s Conservatives.

However, two benefits the Wynne government will enjoy from recent economic developments will be a marginal lowering of road-building costs and new hope for the province’s manufacturing sector based on the steady fall of the Canadian dollar from parity with its U.S. counterpart.

Meanwhile, at the municipal level, new councils in Ontario will be struggling to keep promises made to property taxpayers, promises that in some cases really shouldn’t have been made.

Nowhere is this more obvious than in Toronto, where Mayor John Tory has already had to break a promise not to raise Toronto Transit Commission fares. Clearly, that promise could have been kept simply by raising property taxes that are far below levels found just about everywhere else in Ontario.

Locally, the biggest challenge seems to be that facing Dufferin County Council, which has before it a draft, staff-produced budget calling for a double-digit increase in spending, and with transportation and waste management two areas where costs are rising far faster than the rate of inflation.

The increasing cost of handling wastes is no doubt largely a result of diversion from the old habit of labelling everything trash and dumping it in landfills. Having separate streams for recyclables, compostables and ordinary trash is expensive but far preferable in terms of protecting the environment.

The collapse of oil prices may raise a different sort of challenge for local governments.

Assuming that the cost of asphalt is following the price of crude oil, this should be a year when spending on one form of infrastructure, bridges and sidewalks, should be curtailed in favour of spending significantly more on paving, be it to replace gravel roads with their attendent high maintenance costs, or to resurface existing roadways.

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