Toronto Mayor John Tory calls for new approach to city's finances amid looming budget stresses

cbc.ca
May 16, 2016

Mayor John Tory says Toronto needs to revamp its approach to finances and budgeting, saying the city faces serious funding pressures in the future.

"'The same old way won't cut it anymore," Tory said at a news conference Monday.

Tory made the comments as city manager Peter Wallace released a detailed report that outlines the problems in a document the mayor called the "single most honest look at the city's finances in a long time."

"There's oftentimes a sense around the city that 'Well, it's just going to work out because it always works out,'" Wallace said on Monday.

Among his concerns are how whether the city has the revenue to pay for existing programs let alone undertake new investments into transit, poverty reduction and community housing, Wallace said.

"I and the city managers are in a little bit of an uncomfortable place here," he said.

Long-term financial forecasts

The report by Wallace includes detailed recommendations, but in general calls for a shift away from the current yearly budget cycle to more long-term planning.

"It is no longer appropriate or feasible to defer difficult financial decisions to future years," the report reads. "The problems have developed over years, and solutions will take both time and effort."

The report highlights problems on both the spending and revenue side of the city's finances, from relying too heavily on the Municipal Land Transfer Tax (MLTT) to almost $30 billion in unfunded capital projects over the next 15 years.

Tory said despite the money problems facing the city, he does not support asking property taxpayers to face tax increases greater than the rate of inflation.

Among the problems highlighted in Wallace's report:

• Property tax revenues have decreased - when adjusted for inflation - since 2010. At the same time, Tory said he wants future property tax increases held to the rate of inflation.
• The current year-by-year budget process "focuses too narrowly on the year under consideration," according to the report. Instead, the report recommends the city focus more on revenue performance in previous years and the long-term spending for which Toronto needs to plan. "Most government budgets of comparable size and complexity contain additional analysis of multi-year expense, revenue, economic and intergovernmental factors," the report reads.
• Lack of direct city council scrutiny for some of the most expensive line items. "Some of the City's most significant expense drivers are embedded in the budgets of TTC, [the Toronto Community Housing Corp.] and the Toronto Police Service," the report reads.

Tory called on councillors to move away from "entrenched positions" that he said are keeping Toronto from modernizing its budget process. For example, he said some councillors refuse to consider selling certain city assets.

'Which taxes are the appropriate taxes?'

"All of these things have to change, at least to the point where we're open to having an honest discussion about these things," he said.

Parkdale-High Park Coun. Gordon Perks meanwhile said he was disappointed by what he considers a lack of clarity from the mayor about Toronto's financial priorities.

"You'd think after a year and a half of going through the books as thoroughly as he says he is, he'd have some idea," Perks said. "Which taxes are the appropriate taxes to pay for what kinds of things?"

Perks said he wants to see "more progressive revenue tools" to fund future investments, such as an increase to income tax or a sales tax with a rebate to low-income individuals.

"If [the mayor] is not prepared to say what services he cuts in order to keep property taxes low, then he's doing exactly what he's blamed previous administrations for - which is not being honest with the people of Ontario," said Perks.

Read the entire city manager's report: http://www.cbc.ca/news/canada/toronto/tory-city-finances-live-1.3584168