According to recent reports it looks like the 2011 operating budget “surplus” for the City of Toronto will come in at around $285 million — far exceeding the $154 million predicted during the budget debate back in January. And while I think it’s great that the City isn’t running a budget deficit, I really wish people in Toronto and especially politicians and the media would stop referring to this $285M as a “surplus”. Because it’s not really a surplus at all.
I’ll agree that from a strict accounting perspective the term “surplus” is accurate: “an excess of revenues over expenditures during a certain period of time”. But that’s not the way most people think of the word “surplus”. If you look in a plain old English dictionary for a definition of the word “surplus” you’ll likely find something along the lines of “being more than or in excess of what is needed or required”, and that’s what most people think a budget surplus is – excess. Which is why some people think that it’s okay for the politicians and special interest groups to find new ways to spend that “surplus” money. Except that $285M isn’t really “in excess of needs”, in fact the City actually needs a whole lot more money than it currently has or can possibly raise without a truly massive increase in taxes and user fees.
First off there’s the City of Toronto debt, which at the end of 2010 was somewhere in the neighbourhood of $4.4 billion. The carrying costs on that debt aren’t cheap and we’d be doing ourselves a big favour if we used every spare cent we could find to pay down that debt. But to make matters even worse the City has a large number of financial commitments that are currently “unbudgeted” – which is a fancy way of saying the City has no money to cover those commitments. One of those unbudgeted obligations is the $700M that Mayor Miller committed the city to spend on new streetcars starting in 2013
So given that the City is already $4.4 billion in debt, and that between now and next year the City has to somehow come up with $700M to pay for those “unbudgeted” street cars, can we please stop pretending that the $285M is “in excess of what is needed or required”. And for the sake of those of us who aren’t accountants can we please stop calling it a surplus.