Yesterday at the budget hearing at City Hall, Sheila Block of the Wellesley Institute gave a sharp presentation (you can see parts of it here), and as part of it she discussed the city’s current unwillingness to borrow at very low interest rates in order to finance city building. City council imposes on itself an artificial limit: debt payments cannot become more than 15 per cent of the city’s operating budget. Block acknowledged that such a control could be useful, while saying that by global standards the limit might be prudently raised somewhat higher. That’s an academic question, however, because Toronto is under that limit and Toronto is well under that limit and is actively paying down debt. In 2013, the budget aims to get the city’s debt payments under 12% of the operating budget.
Anyhow, Block suggested that borrowing to finance growth in a rapidly growing city, especially at low interest rates, is far from fiscally irresponsible. Instead, it’s a sign that a city is willing to invest in itself. Toronto is growing quickly indeed, but is not spending to pay for its growth. Instead, Toronto council is simultaneously shrinking its spending, shrinking its borrowing, and shrinking the amount it collects in taxes. Block estimates that in real dollars, funding for services in Toronto will have dropped by $348 million over the past two years when this budget is passed.
Shortly after I heard this presentation, I read this blog post from the National Journal:
“Trying to market a city without transit is like trying to sell a cell phone without a camera.” That was one of the take-home messages from a speaker at an urban planning conference earlier this year, according to my friend who was there. The room was full of city planners who are trying to convince businesses to settle in their areas. Transit is considered key not just because it gives people an easy way to get to work, but it also signals to the private sector that a city is healthy enough to invest in itself.
Melaniphy [of the American Public Transportation Association] believes the public and local leaders are way ahead of Congress in terms of willingness to finance transit. APTA spent much of the last year simply trying to protect existing federal funds from being cut in a two-year highway bill. Around the country, the attitude was different. In 2012, local initiatives to tax more for transit had a 79 percent passage rate. Last year, the rate was 76 percent. “The mayors get it,” Melaniphy said. The state of cities’ transit systems are among the top five questions asked of city officials by businesses looking to locate there. [Emphasis mine.]