Council must close $91 million budget gap as staffing and services cuts recommended

While Mayor John Tory’s allies called the 2017 budget affordable, critics say its the most unfair budget in the city’s history.

Thestar.com
Dec. 6, 2016
By Jennifer Pagliaro

Mayor John Tory has chosen a path to balance his third budget that will push the city’s cash crisis off until next year.

On Tuesday, city staff presented an unbalanced operating budget for the third year in a row. Despite a proposed 2 per cent property tax increase, there is still a $91 million gap.

To make up that shortfall, staff presented council with a choose-your-own-adventure suite of options, proposing what services can be cut or how council might raise the additional funds.

While Mayor John Tory and allies have assured that the current gap can be closed without increasing property taxes, council critics have noted the actual gap is more than double that amount - creating a budget that is both unsustainable and unfair to the city’s most vulnerable.

Tory-appointed budget chief Councillor Gary Crawford said he fundamentally rejects the need to substantially raise property taxes.

“Bottom line: We’re saving the taxpayers money,” Crawford told reporters, noting reductions in spending total $177 million for next year.

“We’re doing this so we can keep the city affordable for residents and will also maintain our commitment to invest in priorities like transit, protecting our most vulnerable and infrastructure.”

Councillor Gord Perks, who has been one of Tory’s most vocal critics, called it “the single most unfair budget in the history of Toronto.”

The proposed $10.5 billion operating budget assumes property taxes will increase by just 2 per cent. That would see the average homeowner pay an additional $55 on their bill next year.

That does not include yet-to-be-approved increases to water and garbage collection rates, totaling an additional $54. It also does not include a 0.5 per cent property tax levy pushed by Tory to pay for transit and housing infrastructure, which adds $14 to the average property tax bill.

In order to close the $91 million gap, the city would need to increase property taxes by an additional 3.6 per cent, or an extra $99 for the average homeowner.

City manager Peter Wallace has warned that the city has a significant revenue problem, not a spending problem, and that short-term budget solutions, such as drawing from reserves, are no longer tenable - which he has likened to kicking the can down the road. He has also reported that “while homeowners have become wealthier since amalgamation, the city is taxing them for a diminishing share of that wealth.”

Despite that, Tory has promised property taxes will not rise beyond the rate of inflation while he is mayor.

Instead he has backed a series of new taxes and measures aimed to have little impact on homeowners, such as a tax on hotel and short-term accommodations, that would raise just enough to cover the current gap - if the province provided the necessary sign-offs and council approved. Altogether, those measures could raise $96.8 million in 2017, according to staff estimates.

Tory’s support for new taxes follows a careful public relations campaign aimed at trying to show residents he was pushing for efficiencies before asking for more money.

But the $91 million gap assumes $100 million worth of short-term strategies Wallace warned against. It includes deferring both debt payments and contributions to badly needed capital improvements for Toronto Community Housing.

Perks said the city should be considering property tax increases to put Toronto more in line with other GTA municipalities. The city currently has the lowest residential property tax rates in Ontario.

“The people who win in this budget are the people who own multi-million dollar homes,” Perks said. “The people who lose are the people who ride public transit, live in Toronto Community Housing, rely on daycare or live in neighbourhoods and simply want the basic services.”

As proposed, the budget includes cuts to services such as park maintenance and 425 fewer city staff positions, many of which are already unfilled.

And even with the existing $91 million gap closed, there’s $14.5 million in service improvements already approved by council or city boards but not included in the preliminary budget — or as Wallace put it, “left on the floor.” Adding them back in will widen the $91 million gap.

That includes nearly $3 million directly linked to the poverty reduction strategy backed by Tory and council last year - that would pay for 75 new childcare subsidies, youth programming and improvements to student nutrition programs among other initiatives.

“Without a single new penny to poverty reduction in the base budget, and nearly $30 million in cuts (to) shelters support and housing, this budget seriously risks harming Toronto children and families,” Michael Polanyi, a member of the advisory committee for the city’s poverty reduction strategy and a worker at the Children’s Aid Society of Toronto said in a release. “Council cannot overlook the built-in cuts in this budget.”

Tory has promised that all anti-poverty measures will be kept off the chopping block, something his office maintained Tuesday.

“Critics will say it is not enough, but this budget invests over $100 million in new and ongoing funding for child nutrition programs, providing our young people with access to good jobs and more resources to care for our elderly,” spokesperson Amanda Galbraith said in an email.

That would increase the total operating gap to at least $94 million.

The proposed budget creates other risks, Wallace has warned council. It assumes the same amount of revenues from the municipal land transfer tax in 2017 as 2016, meaning any softening of Toronto’s hot real estate market would leave the city short millions.

The projected gap for the 2018 budget is already estimated to be at least $410 million.