The City of Toronto Capital Un-Budget
Updated September 1, 2017
The City of Toronto adopts two budgets every years — an operating budget to provide services to the good people of Toronto, and a capital budget to build new things that can be used for the betterment of the City.
Then every year the City publishes a variance report for each, showing actual expenditures compared to budgeted expenditures, to see how we’re doing.
So here is a summary of those variance reports for capital budgets from 2007 to 2016:
As you can see Toronto typically misses the mark on its capital plans by at least a third. Here’s a chart of those numbers:
And here is the same thing as percentages:
This is really, really bad performance for any budget. Cleary there’s something systemically wrong with the management of the City’s capital programs. In fact, I think it’s fair to say that the capital budgets aren’t budgets at all. They are some kind of aspirational document (a planning model), intended to get the City to put money aside for projects “in case” they get built. Calling them budgets at all is misleading.
If they were actual budgets, the City would have realized a long time ago that it doesn’t have the capacity to manage this scope of projects, and would simply reduce its ambitions by a third. That would get them closer. Or of course it could identify the management problems and fix them. Just saying.
But it’s not. So what to do with all that extra money that’s never spent?
Keeping in mind that approved City budgets are approvals for real cash, let’s assume that the average under-spend of $1.5B is just cash that’s rolled forward from year to year. But since we don’t ever spend it, we don’t need to dedicate it to capital. So we could in theory put that money (let’s say $1B to be conservative) in a reserve fund dedicated to (say) unfunded social programs. Again to be conservative, let’s say we release that money at the rate of $100M per year for 10 years. That would create a new source of funding for social programs for 10 years. Pretty good!
I don’t actually pretend to have a prescription for this, but this is pretty bad, and the fact that it hasn’t been dealt with for so long is even worse.
Correction, September 1, 2017. I had chosen the wrong number for 2008 actuals. Now corrected. Apologies.
Henrik Bechmann founded the budgetpedia project in 2015, and is currently the project lead (see budgetpedia.ca). The opinions expressed here are his own.
