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.