Toronto seeks new deal as funding crunch looms

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The City of Toronto is running out of budget reserves and needs co-operation from senior levels of government for a new fiscal framework that includes more revenue tools, council decided Wednesday.

Deputy Mayor Jennifer McKelvie said the city can’t afford to continue the current practice of balancing the annual operating budget with reserves.

“We’re facing huge budget pressures of $46 billion over the next 10 years,” McKelvie said. “We know the way we’re running the city right now is not sustainable… We’re basically being told to take out our RRSPs to pay for our groceries, to pay for our mortgage.

“We wouldn’t run our households like that, we shouldn’t run our city like that either,” she said.

McKelvie said she was particularly disappointed to see a federal budget this week that did not address the city’s need for additional funding to recover from the pandemic and related costs like reduced transit fares.

Council voted to formally ask the federal and provincial governments for a new fiscal framework so that their funding sources match their responsibilities.

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Municipalities across Canada, including Toronto, have been raising concerns that they cannot meet the needs of residents with the narrow funding options available to them.

Toronto will ask the Ontario government for its approval to implement new revenue tools that grow with the economy, similar to provincial sales and income taxes.

The province has previously quashed an attempt by Toronto to toll the Don Valley Parkway and the Gardiner Expressway.

Councillor Stephen Holyday said the city should look at ways that it can reduce its expenses before turning to Ontario or the federal government for financial help.

Toronto has a structural funding shortfall, more than it can hope to cover with property taxes, he said.

“Council has been busy growing government at a rate 2% faster than we can ever take in revenue to try to feed the machinery,” Holyday said. “I ask council to look in the mirror before you go and point to others to say, ‘Bail us out.'”

Councillor Josh Matlow said the previous two mayors and council have ignored the city’s situation.

“I think it’s fair to say the last two mayors and their allies have been telling Torontonians that we’ve been on a pleasure cruise but we’ve been on the Titanic,” Matlow said. “And we’ve had city managers tell us over and over and over again that we are facing an iceburg.”

While Matlow supported a new fiscal and governance framework for the city, he said it’s difficult to go to other levels of government for a bailout if Toronto ignores advice to have a tax rate that pays for basic resident needs like good roads and kids recreational programs.

Matlow, who’s running for mayor, has advocated a 2% dedicated property tax increase to address core city priorities.

aartuso@postmedia.com