Tory’s balancing act
Mayor claims a middle course for city spending despite criticism that cost cuts and fee hikes are harming the poor

theglobeandmail.com
By Jeff Gray
Feb. 17, 2017

Toronto Mayor John Tory’s sales pitch, repeated several times as his 2017 budget neared a vote this week, was that if critics on the “fringes of council’s right” wanted a property-tax freeze and those on its left wanted a larger tax hike, his middle course must be “balanced and fair.”

His operating budget does raise transit fares and user fees, although it pumps some money into the Toronto Transit Commission and Toronto Community Housing. But it also includes both “efficiencies” and straight-up cuts, which city officials insist are “minor” and include chopping a dozen homeless-shelter staffers and ending city swimming lessons in a handful of pools shared with the school board.

It holds to Mr. Tory’s vow to keep the basic property-tax rate increase to 2 per cent, even though critics point out that both spending per capita and property taxes, when adjusted for inflation, have sunk over the past decade.

The budget does not deal with the city’s long-term, and long-standing, financial problems: Its costs keep rising much faster than its revenue, and it has a list of billions of dollars’ worth of projects, including transit lines and repairs to public housing, that it cannot afford. With Mr. Tory’s plan to toll the city’s two main expressways quashed by Ontario Premier Kathleen Wynne, the city has been forced back to the drawing board.

In the meantime, there is a bomb ticking in the city’s books. City manager Peter Wallace warned councillors, again, that the extra tens of millions brought in each year by the city’s land-transfer tax on real-estate sales could evaporate if the market crashes, forcing big cuts or tax hikes: “There is no safety net at this point in time.”

BY THE NUMBERS

$12.3-billion: Total city operating budget, including rate-supported water and garbage

$10.54-billion: Total tax-supported operating budget

$438-million: Increase in that budget over 2016

$191-million: Cuts and “efficiencies”

$184-million: Additional land-transfer tax the city expects to collect in 2017

$56-million: Cash city receives from 2-per-cent property-tax rate hike

$90: Average increase to annual residential property-tax bill

A TAXING DEBATE

Mr. Tory kept his campaign promise to keep his property-tax rate increase below inflation, which was 2.2 per cent in Toronto last year, according to Statistics Canada. But his 2-per-cent basic rate hike is just the start, as the budget also includes a 0.5-per-cent city building levy for infrastructure.

Plus, that 2.5 per cent is only applied after a complex series of calculations, allowed under provincial rules, including some recent regulatory changes. The final result is actually an average residential rate increase of 3.29 per cent.

Still, many on council’s left point out that Toronto, on average, has among the lowest property taxes in the Greater Toronto Area. Councillor Gord Perks called for a 4.26-per-cent rate increase, which would run the average homeowner $62.50 more a year than Mr. Tory’s hike.

But the mayor’s allies point to numbers that show, at least for just two-storey homes, that property taxes in much of Toronto are already as high or higher than those in the rest of the GTA, thanks to the city’s red-hot real estate market.