Mayor John Tory pitches substantial property tax increase to fund transit and housing projects

Thestar.com
December 5, 2019
Jennifer Pagliaro

Mayor John Tory’s plan to significantly increase property taxes over the next six years is being hailed by both his closest allies and staunchest critics and is poised to see strong support at council later this month.

Tory announced Wednesday--in a reversal of his years of criticism of the idea of substantially raising property taxes and scorn for those on council and elsewhere who have continued to push for it--that he would move to increase the city building fund, a special levy on property taxes dedicated to transit and housing projects, by eight per cent over the next six years.

It is the most significant financial move of his mayoralty, five years on, as he comes face-to-face with budget cuts by the province, a difficult 2020 budget process and massive backlogs in TTC and Toronto Community Housing repairs.

It follows years of successive city managers sounding the alarm on the city approaching a financial cliff, as residents have been burdened by a housing crisis, a transit system over capacity, a deepening economic divide and rising unaffordability. Today, the city has one of the lowest residential property tax rates of all GTHA municipalities and Ottawa and over the past decade has seen a decline of $205 in spending per resident.

“We are saving millions each year but we still need to invest billions to build for the future, to invest in maintaining what we’ve built so far, and to invest in the continued success of the city,” Tory said in a breakfast-time speech Wednesday morning at a Canadian Club event held at the Fairmont Royal York hotel downtown.

“And I will not as mayor carry on the old practice of just postponing these investments, sometimes indefinitely.”

The city building fund was first approved by council in 2017, at Tory’s urging, to pay for needed transit and housing infrastructure through the city’s capital budget.

When council voted to implement the tax, which draws from both residential property owners and businesses, it approved a plan to increase the levy by 0.5 per cent every year until 2021, when the increases would max out at 2.5 per cent.

Tory now wants to introduce a motion at the upcoming council meeting later this month that, if approved, would see an additional one per cent increase in 2020, an additional one per cent increase in 2021 and ongoing 1.5 per cent increases through 2025 for a cumulative 10.5 per cent tax once fully implemented--adding eight per cent over the original council-approved plan.

Those increases would give the city the ability to support $6.6 billion in recoverable debt, which the city could use to invest in transit and housing projects now, city staff confirmed.

A 1.5 per cent increase would cost the average Toronto household $43 annually, a release from the mayor’s office said Wednesday--“less than 12 cents a day.” City staff confirmed those numbers. Those annual increases would compound until 2025 under Tory’s plan.

The new funds Tory proposes raising, which will require council’s approval, could help make a dent but won’t cover the more than $20 billion in unfunded TTC capital work which is needed just to maintain current levels of service.

In his speech, Tory said the funds could help invest in new streetcars, subway signal systems and station upgrades as well as meeting his own campaign target of building 40,000 new affordable housing units over the next decade.

But there won’t be enough money for everything.

City staff, in a report released Tuesday, are recommending council ask the federal and provincial governments for financial help with the housing goal, saying their investment is needed to fund half the affordable units.

And the council-approved plans to build a Waterfront LRT, at an estimated cost of $2 billion, and a $1.6-billion Eglinton East LRT into Scarborough are still unfunded.

Tory said in his speech that the city cannot wait for other governments to step in, even though they should, to help with transit and housing. He noted decisions like the provincial government’s rejection of road tolls and the cancelling of additional gas tax revenues that help fund transit capital works were “wrong,” but in the “current political climate” not likely to gain any traction.

Tory’s Wednesday speech came nearly three years to the day of his announcement to pursue road tolls on the Gardiner and DVP.

“I think the people of Toronto understand the need to protect the success we’ve achieved, to support people who need support by building transit to give them access to opportunity, by making sure we have an adequate supply of affordable housing,” Tory told reporters after the speech.

Just this past March, during the 2019 budget process, Tory and his budget chief Coun. Gary Crawford (Ward 29 Scarborough Southwest) accused some members of council of spreading “propaganda” about the city’s financial situation and it being constrained by Tory’s insistence on keeping property taxes low.

During the 2018 campaign, Tory repeatedly goaded challenger Jennifer Keesmaat through social media posts and news releases over whether she planned to raise taxes above inflation, which he again promised not to do.

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On Wednesday, Tory called his plan that would again see residential property taxes increase above inflation “good sense,” “fair” and “reasonable.” Crawford was standing next to him.

The implementation of the city building fund in 2017 saw property taxes, all increases totalled, raised above inflation despite Tory’s promise to keep property taxes at or below inflation and his continued promise to do so.

Council members who have been largely critical of his fiscal stance up to this point praised the mayor’s plan on Wednesday, but were also quick to say it was not just past administrations, but also Tory’s, that had failed to act.

Coun. Gord Perks (Ward 4 Parkdale-High Park), who has been chiefly critical of the mayor’s stance on taxes and has often gone toe-to-toe with him in the council chamber, called Tory’s announcement Wednesday “the right things to do.” In a series of Twitter posts, he also noted “many people have been arguing for this since the Mayor first took office. He has not been kind to us.”

Coun. Mike Layton (Ward 11 University-Rosedale) said that he and others came to the realization long ago that “if we don’t raise the revenue soon, it’s going to become apparent that there are cracks in the system.”

Layton moved a motion in October that would have seen council consider a 1 per cent increase to the city building fund to pay for transit needs, which Tory and a majority of his colleagues rejected.

“I’m very happy that the mayor has come to terms with the fact that we need to raise more revenue to achieve what he wants, what residents want and a what majority of councillors want,” Layton said. “I’m just sorry that it took so long.”

Layton and Coun. Joe Cressy (Ward 10 Spadina--Fort York), who lauded the mayor’s announcement, said there’s still more to do to raise revenues in a city that remains unaffordable for many.

Tory’s plan also drew support from council newcomers including Coun. Brad Bradford (Ward 19 Beaches--East York), who attended his speech Wednesday.

“Our growth demands urgency (with) respect to infrastructure: transit, housing, water and much more,” Bradford tweeted. “Major pressures are mounting--time to invest more, not less. City building levy will help.”

Not all councillors were ready to endorse the mayor’s plan.

“A tax increase is a tax increase,” said Councillor Stephen Holyday, one of Tory’s appointed deputy mayors. “I need to see a deep explanation about why we’re going to taxpayers for additional money.”

Coun. Michael Ford (Ward 1 Etobicoke North), who succeeded both of his uncles, former mayor Rob Ford and current premier Doug Ford, who were both adamantly against tax increases during their time at city hall, tweeted he is “quite concerned” about the proposal.

“I have heard from many who struggle to afford to live in this city, and this will be a further burden to them,” his tweet said.

An external review of the city’s services by Ernst and Young released Wednesday concludes that the city’s efforts to meet the needs of a growing population by cutting is “not sustainable without transformational efforts to change the way the city operates” and that “expenditure control alone is unlikely to fully address emerging fiscal risk.”

It also concluded the city has taken on an “outsize role in the region, bearing a disproportionate burden for a number of services, including public housing, transit and transportation, and social services.”

Ernst and Young identified the potential to save tens of millions of dollars in efficiencies related to city processes, including how it handles procurement, which Tory said in his speech Wednesday he would like to see implemented starting with the 2020 budget