Toronto’s updated Long Term Financial Plan and an accompanying staff report released today suggest all levels of government must step up to address the City’s unprecedented financial crisis.
As detailed in the 2023 Financial Update and Outlook report to Council earlier this year, the City is experiencing a significant immediate and long-term financial crisis: an estimated $1.5 billion starting pressure for the 2024 operating budget and $29.5 billion in capital needs, which both form part of a $46.5 billion shortfall over the next 10 years, an official statement said.
“Even with the actions recommended by staff, immediate and sustained support from the Government of Canada and the Province of Ontario is needed to prevent significant tax increases, service level reductions and/or cancellation of capital projects that align with shared goals, including housing, transit and climate action.
“The Executive Committee will hear speakers (today), ask questions of staff and consider the staff recommendations to enhance revenues, reduce capital expenditures, optimize asset management and improve budget planning and financial oversight. The Executive Committee’s recommendations will then be considered by Council,” the statement read.
The City says it has already taken significant action to promote financial sustainability but provincial legislation limits City revenue options almost exclusively to the taxation of property and its related uses.
Since the onset of the pandemic, Toronto has found more than $2.5 billion in savings, offsets and mitigation strategies. In 2023, Council also introduced the largest residential property tax increase since amalgamation (5.5 per cent) and supported a 1.5 percent annual increase to the City Building Fund Levy for priority transit and housing projects, which is expected to generate a total of $5.3 billion over the next 10 years.
The City also increased other taxes and fees, such as the Municipal Accommodation Tax and TTC fares, and has introduced a Vacant Homes Tax. “However, these actions to date are not enough to address the 2024 Budget shortfall and beyond. The City faces real and urgent consequences starting next year if additional actions are not taken by the City, the Government of Canada and the Province of Ontario,” the statement added.
As an immediate first step, the Executive Committee will consider graduated Municipal Land Transfer Tax rates for high value residential properties valued at $3 million and above, for implementation January 1, 2024. It will also consider a Foreign Buyer Municipal Land Transfer Tax on residential properties, a commercial parking levy, a 911 levy for Next Generation 911 costs and a city-wide review, in conjunction with CreateTO, of underutilized real estate assets.
City officials said that while the Toronto region contributes to more than 20 per cent of Canada’s GDP and 53 per cent of Ontario’s, Toronto receives limited funding from the provincial and federal governments. According to the statement, the City expects funding of $2.7 billion from the Province of Ontario this year, representing just 1.3 per cent of the province’s annual spending, of which $2.3 billion is for programs delivered in partnership with the province such as child care, long-term care, employment and social services and Public Health). From the Government of Canada, the City expects $1.6 billion, just 0.3 per cent of their annual spending.
“Toronto is stepping up to meet our financial challenges and build a safe, caring and affordable city where everyone belongs,” Mayor Olivia Chow said in the statement. “Torontonians deserve a city where they can rely on the TTC to get to work on time, where a young family can find housing they can afford, and where small businesses and communities can thrive.
“These targeted solutions are an important start, but we cannot do this alone. We need our partners – the Government of Canada and the Province of Ontario – to also meet this challenge and step up for people of Toronto, the region, province and country. Only by working together can we realize our shared goals on housing, transit, refugee response, climate and more,” Chow added.
