Dear Winnipeg

A Fun Blog About Infrastructure and Municipal Finance

The Not-So-Golden Ratio

Dear Winnipeg,

Some personal news to share with you: I made a presentation at your City Council’s budget meeting on Wednesday morning!

My presentation was basically a quick recap of stuff that you and I have already been talking about here, so none of this will be new to you.

But on the off chance that you might be interested, I’m including the text of my presentation for you below. [And if you’re not interested, then here’s a video of cats doing funny stuff.]

I was only given 5 minutes, and I had a lot to get through, so while I needed to speak quickly to stay within time, you are free to read this at a slower, even leisurely, pace. [And don’t forget to pause at key places for emphasis!]

Here’s the text of my presentation:

Madam Speaker, Mayor Bowman, Councillors, thanks for the opportunity to speak here today.

My name is Michel Durand-Wood. I’m co-chair of the Glenelm Neighbourhood Association in Elmwood, a board member for the Chalmers Neighbourhood Renewal Corporation, and I also write a really fun blog about infrastructure and municipal finance called Dear Winnipeg.

But today, I come to you as a concerned taxpayer. [Because that’s the best kind!]

I know your budgeting job isn’t easy. There’s never enough money to do everything we need, never mind everything we want. And it’s getting worse every year.

But, no one’s talking about the real reason there’s no money, and that’s where I’d like to start today.

2.5 : 1

That’s the ratio of our $85 billion assessment base to our $35 billion of infrastructure.

And that’s catastrophic. Why?

Let’s look at it this way: If I live in a house assessed at $250,000, 2.5 to 1 means my “share” of our infrastructure is $100,000.

Now, the City would never send me a bill for $100,000 all at once, or at least I hope it wouldn’t.

It would collect in smaller chunks over several years through property taxes.

Cost-Benefit Analyses submitted by developers are using an average of 4%, a 25-year replacement cycle, in their calculations. Given that developers are trying to sell us something, it’s safe to say that 4% is probably understated, so I’ll use that.

So, every year, I need to pay 4% of $100,000 for my share of infrastructure replacement, a total of $4,000. Ouch! Especially since I pay less than $1,700/year in property taxes now.

And that $4,000 is JUST for infrastructure replacement. It doesn’t include any city services. We’d need to double property taxes just to take care of the infrastructure we already own, triple them if we still want our garbage picked up.

But wait, I’ve heard someone say, and I don’t want to single anybody out, so let’s just call him Scott F.

Scott F. says that the City has a spending problem. That if you City Hall Fat Cats would just tighten your belts and quit wasting taxpayer dollars, we’d have all the money we need.

Is that true?

Well, let’s look at it another way: We have $35 billion in infrastructure.

At 4%, that means we need to set aside $1.4 billion/year. Every year. Forever.

So, even if we cut EVERY SINGLE city service, fired ALL the staff and forced all of you to work for free [Don’t worry, we wouldn’t do that. Probably.]

But let’s say we did… we still don’t have enough just for infrastructure replacement.

That’s what 2.5 to 1 means.

We’ve built WAY more infrastructure than the size of our tax base can support.

So how do we fix that? Well, there are two possible courses:
1) We can work at increasing that ratio to a sustainable level. Meaning we focus on doing things that increase the tax base without increasing our infrastructure. Things like embracing infill and planting a lot more trees. And we do things that make better use of our existing infrastructure, like expanding the use of protected bike lanes, making neighbourhoods more walkable, and improving Transit. And we absolutely stop building new roads.

2) OR, we can triple our property taxes.

Seems like a straightforward choice for Winnipeggers to make. There’s only one problem:

Even though WE know about the 2.5 to 1 ratio, all the Scott Fs out there still think it’s simply an issue of mismanagement of City finances.

No one’s talking about 2.5 to 1. They don’t know.

And that means that all the public engagement we do about infill, about transit, active transportation, urban forestry strategies, about everything, is a complete waste of time.

Because unless ALL of it is framed in the context of 2.5 to 1, we’re essentially asking Winnipeggers to choose from a menu that doesn’t have any prices on it. And the prices are important, because they can change people’s choices.

– Do you want the pizza or the kale salad?

– Pizzaaaah!!

– The pizza is $90.

– Oooh, the kale salad has craisins!

If Winnipeggers knew that the price of refusing infill, bike lanes, Transit investment, Vision Zero, all things that would help increase the ratio, is a tripling of our property taxes, I think more of them might be willing to choose the kale salad.

Or maybe not. But we should have that conversation.

Austerity can’t save us. The math tells us we’re already way past that.

That’s why I can’t support a “business as usual” budget, where we make “hard decisions” on which services to cut, and which infrastructure to neglect, this year.

It’s time to have a real, honest conversation about how we got here, and how we’ll proceed going forward.

And we have to do it now, because next year, you’ll be approving our first 4-year budget. Missing this window means kicking the can down the road another 5 years, and hoping it doesn’t all go south before then.

We have 9 months to have the most important city-wide kitchen table conversation in generations, if not ever.

So, here’s my ask for you today: set aside $500,000, or $1 million, I don’t know exactly what these things cost, in order to do the public engagement that is needed to frame everything we do going forward in this critical context. That way, we can gain Winnipeggers’ buy-in for one of the two possible paths out of this mess:
a) either a city that will become much less infrastructure-intensive,
b) or one that’s willing to accept a 200% tax increase.

I promise it’ll make your jobs at Community Committee much easier going forward.

Thank you.

March 20, 2019 Budget Presentation to Winnipeg City Council

Lots of love,

Elmwood Guy

P.S. In case you’re wondering, they didn’t amend the budget to include the public consultations. But I did get some very positive feedback from several of the Councillors afterwards. Baby steps!