Monday, July 30, 2007

Capital vs Operations

Just wanted to point one thing out:

The city's day to day expenses are covered by the operations budget. Under Ontario law, each municipality must present a balanced operations budget each financial year.

Building new stuff comes from the capital budget, which is separate from the operations budget. Unlike the operations budget, municipalities can borrow money in order to balance the capital budget.

So what does this mean about Transit City and other capital projects if the city fails to bite the bullet and raise taxes (assuming that the Move Ontario 2020 doesn't materialize, which would pay for 2/3rds of the cost, leaving the rest up to the feds, or possibly the city if they're desperate)?

These projects still could be built with capital budget money, but there would be no operational funds to operate the projects.

So, while the capital and operations budget are separate entities, they are tied together.

I wrote this post to address future plans in a bankrupt Toronto, but it seems like I've written myself back to where I began.

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