Skip to main content

The Globe and Mail

Major city budgets fail to reflect actual spending, report says

The Toronto skyline is seen beyond the ice buildup at Humber Bay park as Lake Ontario's water freezes on contact as it splashes ashore.

Peter Power/The Globe and Mail

Canada's major cities are failing to reflect actual spending in their annual budgets, according to a report by the C.D. Howe Institute.

The 24-page document, released Wednesday, which compares the budgets of 24 cities from 2003 to 2012, shows that some municipalities appear to overspend, or underspend, by as much as 20 per cent.

"The bottom line is that city governments are doing their budgets in one way, and financial reports in another way," said Benjamin Dachis, a senior policy analyst for the public-policy research institute. "It makes it impossible for a non-expert to compare them."

Story continues below advertisement

Mr. Dachis says the problem is that most municipalities use cash-based accounting in their budgets instead of accrual accounting, which is preferred by the provincial and federal governments. The main difference between the two systems is when they identify revenue and expenses. A cash-based budget would count the full cost of a new bus in the year it was purchased, but an accrual system would divide the total cost over the number of years that bus is expected to operate.

"The way they are accounting on a cash basis compels them to overcharge for projects upfront," Mr. Dachis said.

Toronto and the Waterloo region are the only areas to match their annual budgets with actual spending within a gap of 5 per cent on average. The Halton region is the worst on the list with a gap of 22 per cent. Montreal, Vancouver and Ottawa all have gaps around 10 per cent.

While Toronto tops the list for Canadian cities, Mr. Dachis points out that it would place only eighth out of all Canadian governments, including federal and provincial administrations.

To improve the spending accuracy and financial transparency of all cities, he recommends that they switch to accrual accounting methods for both budgets and financial statements.

Report an error Licensing Options

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at