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February 25, 2021

Perplexing Budgets Overstate Financial Pain of Cities

  • William B.P. Robson and Miles Wu look at the annual budgetary projections for spending and the bottom line in Canada's 31 largest municipalities by population over a decade (2010 to 2019) and compare them to the results reported in those municipalities’ year-end financial statements. They find budget debate anxieties about cities' fiscal health tell a misleading story.
  • The financial statements reveal that Canada’s biggest municipalities were in robust health in the run-up to 2020. The 31 largest by population tallied an aggregate surplus of over $10 billion in 2019. Toronto led the pack with a $1.6 billion surplus, followed by Calgary at $1.3 billion. Montreal’s surplus was $884 million, and Ottawa’s $860 million.
  • Less than half of the municipalities produce budget documents with numbers presented on the same basis – using public sector accounting standards (PSAS) – as the presentation in their year-end financial statements. Robson and Wu urge all municipalities to adopt these standards in their budgets to provide a fuller picture of their municipality’s activities and costs, and facilitate comparisons between budgets and results.

Note to Readers: This is an updated version of the Commentary with some revised numbers for Halifax.

William Robson

Bill Robson took office as President and CEO of the C.D. Howe Institute in July 2006, after serving as the Institute’s Senior Vice President since 2003 and Director of Research from 2000 to 2003. He has written more than 270 monographs, articles, chapters and books on such subjects as government budgets, pensions, healthcare financing, inflation and currency issues.

Miles Wu

Miles Wu is a former Research Assistant at the C.D. Howe Institute. In his role, he provided research support, literature review, and analysis for various projects and presentations. Prior to the C.D. Howe Institute, Miles had worked at the Information Technology Association of Canada, Queen’s Park and Toronto City Hall in both internship and full-time positions.