Toronto council opens a door to considering new revenue tools
Increased outsourcing and asset sales are also on the table, though moves to consider selling Toronto Hydro and the parking authority lost on narrow votes.

TheStar.com
June 7, 2016
David Rider

City council voted Tuesday to open the door to exploring new revenue tools, increased outsourcing and public asset sales.

"What this means, in effect, there will be a series of difficult decisions for council,” city manager Peter Wallace told council, adding “they are at the doorstep.”

Councillors also agreed to look at whether contracting out city services could save money, a move some compared to the film Groundhog Day, where the movie’s star is doomed to repeat the same day.

Mayor John Tory disagreed, saying the exercise is worthwhile even if it has been done by previous administrations.

“I don’t accept that we’ve wrung every ounce of efficiency out of this organization,” Tory said. “High-efficiency organizations ask those questions over and over and over again.”

On June 21, Wallace will provide an update to Tory’s executive committee on a variety of potential revenue tools, including a city sales and hotel tax. They were identified in a 2007 consultant’s report before being resoundingly rejected by council.

Wallace and staff will also report back to council in the fall with an overall “framework” for the city’s long-term financial and budget process.

Tory has not said which taxes or fees he would support, but remains committed to his election campaign promise of keeping the city’s property tax rate at or below the rate of inflation.

Wallace has already warned council that it can’t continue “the practice of deferring” expenses, citing $29 billion in unfunded capital projects and priorities over 15 years.

Toronto councillors also voted Tuesday to consider the sale of Toronto Hydro and the Toronto Parking Authority, rejecting Councillor Kristyn Wong-Tam’s motion asking council to reject selling the two public assets.

But the votes were close. The Toronto Parking Authority lost on a tie, 21-21, and the Toronto Hydro vote lost 24-19.

“I think the votes actually revealed that any privatization moves on the floor of council will have a real tough uphill climb,” Wong-Tam said.

Much of Tuesday’s day-long debate on the city’s fiscal health revolved around how to pay for services, badly needed infrastructure upgrades and other city-building initiatives.

The city has been balancing its books by relying on the municipal land transfer tax, utility rate increases, TTC fare hikes and user fees, but they can’t form the basis for responsible future fiscal planning, Wallace told council.

When adjusted for inflation, property tax revenues in the city have actually decreased since 2010.

Wong-Tam said based on what she heard Tuesday, she is not optimistic that council will have an appetite to look for any new sources of revenue.

While the mayor has said a hotel tax is on the table, it will only generate about $10 million a year. That is “a drop in the pocket” when compared to what Toronto needs to meet its operating and capital costs, Wong-Tam said.

Also Tuesday, Councillor Jim Karygiannis briefly apologized at council after the city’s integrity commissioner found he harassed and intimidated residents in his Scarborough ward in two separate incidents involving parking violations and hailing an Uber.

“Sometimes our work zeal overtakes our decisions and we overreact. I believe in this case, and on these two items, this was the case and I offer my sincere apologies."