City’s draft budget ties property taxes to inflation, relies on $77M in anticipated federal funding
Toronto’s proposed $12-billion budget is keeping property taxes tied to the rate of inflation while relying on millions in anticipated, but unconfirmed, federal government funding — an approach some say doesn’t go far enough to support key city services.
As it stands, the 2020 budget includes $67 million in new investments in transit, poverty reduction, and other areas, including the hiring of dozens of new paramedics, TTC operators, and police.
That marks an overall spending increase of 1.43 per cent, which falls below the inflation rate of two per cent used by city staff for the proposed tax increases.
The hike amounts to around $60 more for an average homeowner, and is coupled with other increases including a previously announced boost to the city building fund.
That totals, on average, a roughly $130 increase in the bills homeowners will pay to the city this year, if council backs the plan.
“I believe this budget charts a responsible path forward for the city in 2020,” said budget chief Gary Crawford.
‘An important balance’
“It strikes an important balance that protects services, invests in key services, and keeps property tax increases for the operating budget at the rate of inflation.”
Most of the tax-supported budget comes, as expected, directly from those taxes, with close to 40 per cent from property tax, nearly seven per cent from land transfer tax, and other revenue from user fees, fines, TTC fares and other sources.
But more than 20 per cent is also from federal and provincial contributions.
That includes a financial hole of $77 million in federal funding for refugees, which the city anticipates will arrive, but is not yet confirmed.
While there are financial reserves available, city officials stressed refugees are under federal jurisdiction.
“If we solve the problem, from the federal government’s perspective they’re not going to come and assist us,” said chief financial officer Heather Taylor in a media briefing following the budget’s release.
The tactic echoes last year’s budget process, where the 2019 budget was balanced through a $45-million hole in expected federal refugee funding — which was indeed filled several months later.
Crawford is “quite confident” the cash will come through again.
“These partnerships are important … because we cannot build and we cannot maintain the city we have now without incredibly important partnerships with the federal and provincial governments,” he said.
Others say the city should also be expanding its own revenue sources by raising taxes beyond inflation.
“Toronto continues to be one of the lowest-taxed jurisdictions in anywhere in Canada,” said Coun. Gord Perks.
“This budget, again, reduces the amount of tax revenue that we get per person in the city of Toronto. That’s entirely the wrong way to go.”
While he acknowledged it does propose investments in various city services, he said it’s “not on the scale necessary” to ensure Toronto thrives in the years ahead, nor does it combat a growing backlog in the city’s state of good repair.
“This budget utterly lacks in imagination in making the investments Torontonians know they need,” Perks continued.
“If you drive on a city street, you can count on the roads getting worse in future years. If you take public transit, you can count on the transit service getting worse.”
Coun. Mike Layton said while there could be greater investment in transit and affordable housing through the nearly $7 billion unlocked by Tory’s city building fund hike, residents are still struggling — and are being forced to shoulder more of the costs through an additional planned TTC fare hike.
“Are we delivering the level of service they expect and need?” he questioned.
In a statement, Mayor John Tory stressed his commitment to delivering city investments and protecting services, including initiatives targeting some of the city’s most vulnerable residents.
“While the budget invests an additional $18.6 million in poverty reduction and addressing the roots of violence, I firmly believe that we must go further in investing in kids and families, especially as it relates to the threat posed by escalating gun violence,” his statement reads.
The budget process continues in the weeks ahead, including community consultations, with the full budget heading to council for approval in February.
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