Don’t Look Up… the City’s Financial Statements
It’s hard to believe we’re nearly two weeks into 2022 already. In a mere ten months or so, we’ll be welcoming a new City Council following our next municipal election.
And that Council’s back will immediately be saddled with an $851-million financial monkey. [Though it’ll probably be more, because that number doesn’t yet include 2021.]
If you recall, $851 million is the current size of the City’s Net Financial Liability. That’s a fancy accounting term that means we have spent all of the money we’ve ever collected in the past, and that we’ve already pre-spent nearly $1-Billion of money that we will need to collect in the future.
It means we meet the technical definition of insolvency.
And it’s been getting worse every year for a long time. Despite service cuts. Despite deferring maintenance. Despite record population growth.
So saying they’ve got a big job ahead of them is an understatement.
But they won’t be successful in righting our financial ship by upholding the status quo, because the status quo is what brought us here. They certainly won’t be successful if they refuse to acknowledge that We. Are. Insolvent.
It’s a scary prospect, I know. And it’s human nature, when faced with something so scary, to want to hide from it. But I’ve said it before, we are all in this together. The City’s financial woes are OUR financial woes. The more things go south, the more we will all feel it.
There is no money to continue as we have been, no way to pay for all we’ve built. Ignoring that will only lead us to disaster.
Only a turkey would think otherwise.
In his 2007 book, The Black Swan, Nassim Nicholas Taleb put forth what he called “The Turkey Problem”:
Consider a turkey that is fed every day, every single feeding will firm up the bird’s belief that it is the general rule of life to be fed every day by friendly members of the human race ‘looking out for its best interests,’ as a politician would say. On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey. It will incur a revision of belief.— The Black Swan, Nassim Nicholas Taleb (2007)
Some turkeys would love to ignore the evidence sitting right in our financial statements, and point to things like currently soaring real estate values, or the City’s good credit rating, as proof that things are fine. But remember that the farmer will feed the turkey every day… until the day he doesn’t.
We don’t need to wait until that day to change course. After all, only the turkey doesn’t see it coming. The farmer knows.
So if you see the services being cut, the infrastructure falling apart, the debt levels climbing, the net financial position in the negatives and still falling, and STILL think things are fine… can you say that you are absolutely sure you’re not a turkey? How sure? Would you bet your house on it?
Because you already have.
If you are one of the 67.3% of Winnipeggers who owns their own home, then you are highly exposed to the risk of a municipal bankruptcy.
When a City goes bankrupt, that absolutely has an effect on everything in that city. In Detroit, vast swaths of population moved away, the local economy was left in shambles, and fully one third of the city’s built-up area was simply abandoned.
Even for years after Detroit’s bankruptcy, you could still find a lot of houses for sale there for less than $500.
For most people, their home is the largest financial transaction of their life. If our City goes bankrupt, are you prepared for what will happen to your home’s value?
And if you are part of the 32.7% who rent, you are also exposed. Because, as always, whatever your landlord experiences inevitably gets passed on directly to you.
Whatever colour you vote, whether you own or rent, whether you live in the suburbs or the inner city, we are all going to feel this.
I’m not saying we’re necessarily going bankrupt tomorrow, but if we change nothing, this IS going to happen. As Hemingway put it: it’ll happen gradually, then suddenly. And the longer we wait to change course, the more it’ll hurt.
But if you still choose to remain in denial about this, then to paraphrase Meryl Streep’s presidential character in that recent movie, whatever you do, Don’t Look Up… the City’s financial statements.
Now for some honesty time.
Faced with all this, I must admit that even I have considered cashing in my chips and just moving on. Many times over the past year I’ve discussed with my family, my parents, my siblings… should we just all sell our homes and move to another city together?
Maybe Amsterdam? [After all, NJB makes it sound pretty amazing.]
Maybe Paris? [Even before Mayor Hidalgo’s push towards a 15-minute city, Paris already had a lot going for it.]
Minneapolis? [It eliminated single-family zoning in 2019.]
What about Edmonton? [Council unanimously voted to end parking minimums in 2020.]
Or Hamilton? [Their Council recently voted to accommodate ALL of its population growth over the next 30 years within its existing boundaries.]
I mean, I’m willing to consider literally ANY city showing even the slightest amount of self-awareness of its financial future. Literally ANY city that isn’t still obliviously bragging about Record Road SpendingTM in every yearly budget while simultaneously slowly going bankrupt.
You know, like a turkey.
And yet, I’m still here. Here’s why.
In all the years that I’ve been writing these letters, volunteering in my neighbourhood, and speaking at Council meetings, there’s one common element that has kept me going.
And that’s you.
Over the years, I’ve had the privilege of meeting so many unbelievably smart, dedicated people who are just rock stars, not afraid to question the status quo, and giving their all to turning our city around to lead us into a sustainable future. One that doesn’t destroy the very planet we depend on. One that doesn’t leave anyone behind. And one that can continue to pay for itself. Forever.
Some of you have been pushing to make our transportation system sustainable. Others for better land use policies. Climate action. Trees. Financial sustainability. Better recreation. Preserving green spaces. Connecting neighbours. Some are young, some are old, some are volunteers, and some work for non-profits. Some even work for the City.
Dedicated Winnipeggers, pushing for change every day, in many ways.
I am not alone. YOU are not alone.
So I have faith that, out of the 45,000 of you who read these letters in 2021, at least some of you might be planning on running in next October’s election. Truly, I wish more of you would consider it.
I recognize it’s not for everyone. [Wearing a suit every day for the next 4 years? No thanks!]
But if, unlike me, you already own a suit, then you’re already halfway there! And I wholeheartedly encourage you to go for it! The fewer turkeys we have on Council, the better. Plus there’s even a webinar for that.
If Council isn’t your bag, and you’re still inspired to act, just start. Anywhere. Pick something you care about, and take the next smallest step you can take to help. Then repeat. It doesn’t matter how small. We need people working at all levels, and right now, I’m most effective at the Neighbourhood Level. Your level might be different. So pick the level that is doable for you and go.
That is what keeps me here. I’m in awe of your efforts, and I believe we’ll be successful before it’s too late.
I believe in YOU, Dear Winnipeggers.
In fact, I’m betting my house on it.