Toronto is region’s biggest per-person spender, but new report shows city spending also dropped the most

A new report shows Toronto spends more per resident than any other municipality in the region — but over the last decade, the city’s per-person spending has also dropped the most, which some say raises questions about the quality of services residents are helping pay for.

The findings from the Fraser Institute, a think tank that advocates for lower public spending and smaller government,  show Toronto’s per-person spending in 2016 was $4,010, roughly $920 more than Vaughan, the second-highest spender on the list, and significantly more than the lowest-spending large municipality, Milton, at $2,385.

At the same time, between 2009 — the first-year of new provincially-mandated accounting practices — until 2016, the most recent year when the report’s authors could obtain comparable data, Toronto’s per person spending actually declined by nearly eight per cent, marking a larger drop than in any other municipality.

In contrast, some other cites are hiking spending, including Brampton, which increased per person spending by roughly 15 per cent, and Mississauga, which raised it by nearly 10 per cent.

“There’s some tension, I suppose, in those two findings, but the key takeaway for us was Toronto still has the highest level of municipal spending per person across the region,” said Ben Eisen, a senior fellow with the Fraser Institute’s Ontario Prosperity Initiative.

But several left-of-centre Toronto councillors say that’s not their takeaway from the eye-catching report.

Lower spending ‘problem’ for service quality, councillor says

The city’s spending going down is a “problem,” said Coun. Gord Perks.

“You’re seeing it show up in the quality of people’s ride on public transit; you’re seeing it show up in the fact that our shelter system is past capacity, that families can’t get child care,” he said.

“I think the people of Toronto deserve better service, not less service,” echoed Coun. Mike Layton.

The authors themselves note the report should be used for a broad look at municipal spending and revenue, not a “gauge of performance.” But by choosing spending as a measure of how municipalities are doing, instead of the outcomes of those choices, the authors paint a “misleading” picture, Perks said.

Both councillors also stressed Toronto faces different budgetary challenges than other smaller municipalities.

“The fact is, the City of Toronto provides a lot of region-wide services,” Perks said. “People come into work in Toronto on the TTC. We’re the only municipality that has a very robust shelter system.”

And because of that, the city has different demands on its budget, including the maintenance costs for the TTC and in-city highways including the Gardiner Expressway and Don Valley Parkway, noted Layton.

“The cost of running the government of the city of Toronto is actually lower per-person than in other municipalities,” he added.

“But when you look at the transportation costs of moving millions of people around, not only those who live in Toronto but other municipalities, it costs more for the average taxpayer to achieve that.”

Highest spender, but not highest revenue collector

The report also found Toronto’s revenue dropped over the time period studied by more than three per cent, and despite spending the most per resident in 2016, the city was only fourth-highest in terms of revenue collected per person at $4,476.

A chunk of that revenue comes in the form of funding from the federal and provincial governments, along with property taxes paid by residents — though Toronto relies less on that cash source than most other municipalities in the region.

One 2019 report from Ryerson University found more than 20 nearby municipalities have higher rates, suggesting Toronto has room to hike average property taxes by around 20 per cent.

Comparing property taxes as a percentage of household income, Toronto dropped even further on the researchers’ list — ranking second-lowest, only above Milton.

In a statement on Wednesday, in response to the Fraser Institute’s new number-crunching, Mayor John Tory’s office maintained the city has protected and invested in new services, including free TTC rides for children, child-care subsidies, and affordable housing, all while keeping tax increases at the rate of inflation.

“This has been possible by modernizing the city’s service delivery which, between 2015 and 2019, resulted in saving $90.8 million through efficiencies — $22.5 million in the 2019 budget alone,” wrote spokesperson Lawvin Hadisi.

The new report comes amid ongoing talks between Tory and Premier Doug Ford’s government following a slate of retroactive funding cuts to city services, a reversal from Ford on this year’s round of cuts, and a possible audit of city spending proposed by the province.

Ivana Yelich, a spokesperson for the premier’s office, stressed all elected officials have the job of finding savings, and said the province looks forward to working with municipalities to find more “efficiencies.”

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