The measures presented in the Plante-Ollivier administration’s 2022 budget once again demonstrate Projet Montréal’s inability to manage municipal finances. In addition to not taking the pandemic’s fifth wave into account, the administration continues to hike Montrealers’ debt load without providing them more or better-quality services.
In fact, Montréal’s budget has ballooned by 24% over the past five years, an increase of $1.26 billion. In 2022 alone, spending has risen by 4.7% for a total budget of $6.46 billion. Recurring revenues are also not keeping pace with expenses, forcing the administration to squander the city’s reserves, borrow more and beg funding from the Québec government.
“Projet Montréal has always spoken jovially about the city’s finances, but the reality in 2022 is that the boat is taking on water. The administration can no longer fulfil promises it made to the population less than three months ago and, above all, it is no longer able to adequately respond to the many crises threatening Montréal, such as housing, public safety and COVID-19,” said Aref Salem, leader of the Official Opposition at Montréal’s city hall.
Plugging the gaps by any means necessary
The administration is presenting what could be described as a “Gruyere budget” because it has so many holes. Once again, revenues for several budget items, such as fines and penalties, were overstated while many expenses, such as public safety, were underestimated in order to balance the budget. In other words, the administration is managing the finances with fingers crossed that adjustments can be made during the year to close these gaps.
While the Mayor claims that the city has “incredible borrowing capacity”, the numbers show that reality is not so rosy. With a debt ratio of 119%, the administration has exceeded Montréal’s allowable debt for a fourth consecutive year and is within 1% of Standard & Poor’s downgrade scenario. This will have major consequences on Montrealers, who will pay a record $428 million in interest in 2022.
“Nearly half a billion dollars lost! The administration assures us that they plan to return to a 100% debt ratio in 2027, two years after the next municipal election in 2025. Obviously, it has decided not to start the work in 2022,” said Alan DeSousa, the Official Opposition’s finance critic.
Having borrowed up to its limit, the administration has turned in recent years to the use of non-recurring amounts, such as its almost-depleted reserves, and to the provincial government. Québec has balanced Montréal’s last two budgets at a cost of $413 million ($150 million in 2019 and $263 million in 2020-2021). This situation of financial dependence inevitably leads to political dependence, as evidenced by an answer from the city’s finance department during committee hearings. The department said it hoped the Québec government would pay for increased cash outlays that would allow the city to return to a 100% debt ratio by 2027 – a strategy that was supposed to be put in place this year.
“The desire to return to a 100 percent debt ratio in 2027 is just a wish put on paper, not the subject of a specific administration plan. We are managing on the fly and the lack of planning is worrisome,” added Laurent Desbois, vice-chair of the Commission des finances et de l’administration.
Increasingly difficult to stay on course
Weakened by its disastrous management of public finances, the administration no longer has the means to achieve its ambitions. Ultimately, Montrealers are being cheated out of many promises that will not be fulfilled. Funding for the housing service is being cut by $9 million; the $800 million promised over the next 10 years to create 60,000 affordable housing units is nowhere to be found in the budget, and the money dedicated to land purchases is constantly being whittled down. The administration has no answer to the housing crisis, other than to offer a warmed-over version of the By-Law for a Diverse Metropolis and the 12,000-unit housing strategy, which will continue this year after an abysmal failure.
In the area of public safety, the picture is just as bleak: only 60 of the promised 250 police officers will be hired and financing the body camera program is now a major concern, according to the mayor herself. The city can also no longer afford to maintain such crucial services as those offered through neighbourhood police stations.
The situation is also critical at the Société de transport de Montréal, which will have to continue making cuts in 2022 despite the $48 million in cuts made last year.
“The 2022 budget is the result of the previous four budgets and could well be the tipping point for a much more unpleasant change for Montrealers, either a tax increase or a decrease in services,” concluded Salem.
Given this situation, Ensemble Montréal councillors will vote against adopting the 2022 budget and the 2022-2031 ten-year capital investment (PDI) program at an extraordinary council session scheduled for January 20. Their main criticisms will be published in a minority report to be submitted to the finance committee.
Although the budget and the PDI will be adopted without the Official Opposition’s support, our party wishes to optimize the administration’s budget. With this in mind, the Official Opposition will be introducing three amendments to correct a number of elements identified in the administration’s proposals:
- To add $250,000 to the budget of the Office of the Auditor General to enable it to complete an audit of the pre-election report on public finances, and that the administration provide this amount on a recurring basis for future years;
- To create an investment project for the construction of a sports centre in the borough of Montréal-Nord in the 2022-2031 PDI, and to allocate $5 million in 2022, $15 million in 2023, $20 million in 2024, $20 million in 2025, and $17 million in 2026;
- To create a COVID-19 Contingent Expenditure Credits budget item under common expenses in the 2022 municipal budget and allocate $25 million to it.