Former Mayor Larry Di Ianni and Mr. Ecklund's daughter Erika

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LARRY'S CORNER- Hamilton's Former Mayor Speaks

former Mayor of Hamilton, Larry Di IanniGoverning in Tough Economic Times

By Larry Di Ianni
(posted February 9, 2009)

Several months ago, the Prime Minister told us that Canada’s ‘fundamentals’ were strong and our country would avoid a recession. He also predicted surplus budgets for the foreseeable future. Similarly, the Premier of Ontario, at a fundraiser I attended in Hamilton, also issued reassuring words to our community. “We will be ok”, he intoned soothingly. Although his prognosis wasn’t as rosy as the PM’s, it was also not alarmist.

We listened to their words and have been watching the economy devolve.

Now, one can’t turn on the radio, open a paper, or put on the TV without there being news items of layoffs, shutdowns, reductions and economic stagnation of the worst possible order. Everywhere one turns, the prognostications go from bad to worse.

What is the impact of this new economic reality to those who are in governing or leadership positions?

Bob Rae told me not too many months ago, as he was seeking the leadership of the Liberal party, that he had learned from his experience as the NDP premier of Ontario during the last big downturn in the ‘90’s. Then, he saw revenues fall through the floor, sending a feeling of dread among all government and bureaucratic circles of the day. He decided to confront the bad economic news and decreasing finances by sharing a bit of pain among all Ontario’s public service through his Social Contract policy. He was quickly assailed for an approach which, on reflection, was quite humane. His government went down to defeat at the hands of the Harris Tories.

Mike Harris’ approach was quite different from Mr. Rae’s. Premier Harris slashed taxes for corporations and decimated spending on social programs. Health, Education and Social Services took the brunt of his government’s axe. Nurses were laid off. Doctors left in droves for American cities, the most marginalized were made to do with less through reduced welfare availability; and municipalities took the brunt of increased spending because of the downloaded services from Mr. Harris and his neoconservative colleagues. His government too was ousted from office after several terms.

And now, after a period of unprecedented growth we are staring into the abyss of a severe recession, nearing another global depression. World markets have tumbled leaving savings at an all time low. The banking system seems to have failed in many countries, except Canada’s which did not succumb to the deregulation madness that gripped other jurisdictions, thanks to then Prime Minister Chretien’s rebuff of the international trend.

How are governments responding? At the federal level the Conservatives have instituted a massive spending budget to help stimulate the economy. The province is in the process of tightening its belt on the one hand, but also participating in stimulus spending along with the federal government. Municipalities are always the most vulnerable. They are the ones who deliver programs and have only the property tax base to go to for revenue, as well as whatever largesse the other levels of government transfer to them.

When I attended provincial mayor’s meetings, the topic of discussion always gravitated towards finances. Mayors and Regional Chairs were always petitioning senior levels of government for a greater share of the wealth created in our communities. This petitioning led to the Gas Tax contributions at the federal level and the redressing of the Social Services download at the provincial level. We always reminded the senior partners that we needed more to deliver programs in good times and to be ready for the inevitable downturn.

That time has now come. The city’s social services rolls are swelling as are the other ‘safety nets’ operated at the three levels of government: welfare, social housing, employment insurance etc. The unfortunate thing for cities is that as the economy heads south, the social assistance needs head in the opposite direction. Mix into this situation the inability to pay because of reduced dollars and the governance triage becomes truly difficult.

Hamilton’s response thus far seems to be recognizing the dilemma we face. To some extent the city is putting its eggs in the stimulus package announced in the various budgets. The provincial budget should help bring more focus to our situation, as well as the eventual decision on the yearly bailout request of social services cash.

However, as we face a looming $1Billon under-funding in capital needs, and as we have listed, but not financed, big ticket items such as the Lister building the Pan Am Stadium, the Light rail experiment and the Education Center, the new fiscal reality is asking our leaders to complete a needed priority-setting process. The question to be answered is “What do we really need; and what will enhance our economy in the future?” before we decide how to spend the $100’s of millions in the next few years.

Similarly, as we look at the billion-dollars-plus operating budget, we need to come to grips with efficiencies and real or perceived duplication, as well as a hard analysis of service levels which drive the operational side of the city’s equation. Hard questions must be asked; and even harder answers and messages must be provided if we are to survive the hard times.

I have said before that the next election will be won or lost on the question of taxes. Right now, the city is seen as being irresponsible about its spending and not serious about reining in its profligate desires. Fair or unfair, that is what people seem to be saying. Our grasp needs to be shorter than our reach so we can pursue more ambitious dreams for our city; but now is the time to also temper these wishes with a dose of cold, fiscal reality as we move through the challenging times ahead.

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