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City manager demands spending freeze of all city services

Mayor Rob Ford, Deputy Mayor Doug Holyday, Executive Director of Human Resources Bruce Anderson, Chief Negotiator Bob Reynolds and City Manager Joe Pennachetti during a press conference to discuss the latest information on negotiations with the CUPE 79 in Toronto, on March 29, 2012.

Deborah Baic/Globe and Mail

An across-the-board spending freeze and a ban on new service initiatives are part of the guiding principles for Toronto's 2013 budget, according to instructions given by the city manager to senior staff and agencies.

The fiscal guidelines are spelled out in a memo sent by the city's top civil servant, Joe Pennachetti, and CFO Cam Weldon as staff began to prepare for this fall's round of budget talks.

It assumes a $200-million gap between the city's revenue and costs next year and asks for a "0 per cent increase" in all budgets "as a minimum starting point" to closing that shortfall.

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The sweeping request touches all city services including the Toronto Transit Commission, libraries, the Toronto Zoo and Toronto Public Health.

The wording of the memo, sent May 1 and obtained by The Globe and Mail, is similar to the request made public earlier this week for a spending freeze to the Police Services Board. The freeze makes no provisions for inflation or wage settlements, which must be covered within existing budgets.

The directive sets the stage for what is shaping up to be an acrimonious autumn as Mayor Rob Ford and budget chair Councillor Mike Del Grande square off against councillors opposed to their cost-cutting agenda.

"We are going to have a difficult fall," said Councillor Denzil Minnan-Wong, a fiscal conservative and member of the mayor's executive. "I don't know if council has the appetite to show the level of discipline that is required to get the number to zero."

Councillor Gord Perks, a critic of the mayor, countered that a blanket freeze is the wrong approach.

"An arbitrary number across the board is never a good way to budget," he said. "We have a council and mayor that cannot figure out where the city is going. So there are no priorities, which means the civil service has to treat every department as the same – that will not fit the realities on the ground."

Mr. Perks predicted departments that met last year's 10-per-cent budget-cutting target will get an easier ride this year than those that failed to meet that goal, such as the police. He also cautioned that the first draft of the budget prepared by staff rarely survives the budget process, which begins in earnest on Nov. 29 with the public launch of the operating budget.

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In addition to cutting costs, council could balance the city's books by increasing revenues – including taxes.

In a non-binding memo sent to staff this spring, Mr. Ford asked for a 1.75-per-cent increase in residential taxes next year, followed by a two-year freeze. Financial forecast documents prepared by staff earlier this year have assumed a 2.5-per-cent increase in residential taxes and 0.83 per cent for business.

Mr. Del Grande, who preached the need for austerity to the police board this week, said he is not out to close playgrounds or kill programs, as many of his critics would suggest, but to bring the city's spending in line with available resources.

"I am doing this for everybody's future," he said. "Unfortunately, they want me to be the bad guy."

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