City staff recommend budget freeze for 2018

Keeping to 2017 spending could mean service cuts amid budget challenges, report outlines.

Thestar.com
May 8, 2017
By Jennifer Pagliaro

City staff are recommending a budget freeze next year as Toronto remains big on ambition but woefully short on cash, city officials outlined Monday.

When inflation is considered, that freeze would actually see the city’s multi-billion-dollar budget and the services it funds cut in 2018.

A direction report to budget committee and council from city manager Peter Wallace and chief financial officer Rob Rossini asks for the “status quo” in both operating expenses and capital projects.

The decision, ahead of the budget process which kicks off in November, is up to council.

The city faces an initial budget gap of $343 million next year, assuming property taxes are raised by 2 per cent - in line with the rate of inflation, as has been Mayor John Tory’s political sticking point.

That pressure, city officials wrote, is also largely driven by a recurring $91-million budget gap that was covered with one-time measures in 2017.

As usual, most of the pressure on the $10.5 billion operating budget comes from city agencies including the TTC and Toronto Community Housing Corp., as well as the police service.

Last year, the request for a 2.6 per cent budget reduction across all city divisions and agencies - pushed by Tory and approved by council - was largely criticized for squeezing budgets responsible for managing at-capacity homeless shelters, the lack of affordable childcare spaces and a jam-packed transit system.

Wallace, who has been warning the city of a looming budgetary crisis since his arrival earlier in this council’s term - often using a graphic of an iceberg in his presentations to council - did not sugarcoat the path ahead.

“Balancing the operating budget pressures will be a challenge,” the report reads.

It strongly emphasized that one-time solutions previously used to meet the challenge, including deferring debt repayments, cannot be relied on again.

And it noted last year’s budget relied heavily on an overachieving municipal land transfer tax amid the hot housing market that all levels of government are now trying too cool - which could punch an even larger operating hole in Toronto’s budget.

Without new sources of revenue, including increased property taxes, Wallace warned “strong action and a willingness to both reduce and sustain reductions in service levels” will be required.

The problem, the report said, is a “reluctance” by council to make that choice, which it called “a mismatch between service aspirations and revenue generation.”

Councillor Gord Perks - who has been chiefly critical of austerity measures under Tory’s administration - called the newly released direction “a recipe for failure.”

“It means the quality of life for people who are struggling in Toronto will get worse,” he said. “If council actually imposes that it will mean more closed housing units and fewer people riding public transit and less access to daycare.”

“At this time, the mayor is reviewing the budget direction report,” his spokesperson Don Peat said in an email.