Think Toronto’s $1.5 billion budget shortfall is a symptom of COVID-19? Think again

Yorkregion.com
October 20, 2020
Matt Elliot

Big number: 11 cents, the per-resident amount contributed to Toronto’s social housing costs in 2018 by the provincial government. That’s about 0.04 per cent of the total amount spent.

There’s a stat buried in city hall’s new 270-page COVID-19 recovery plan -- set to be considered by Mayor John Tory’s executive committee on Wednesday -- that perfectly sums up why it’s going to be so hard for Toronto to dig out of this hole.

In 2018, the report says, about $933 million was spent in Toronto to provide social housing. That works out to about $315 per resident. Of that figure, the provincial government contributed $333,250, or about $0.11 per resident.

Eleven cents.

Think about that. Dwell on it. Picture a dime and a penny. (Remember when we had pennies?) Public housing is supposed to be a shared responsibility. For decades, it was considered more of a provincial responsibility than a municipal one, because the need for affordable housing doesn’t stop at city borders. But the arrangement is now lopsided to the point where one side -- the province -- is chipping in the per-resident equivalent of pocket change.

The stat originally comes from analysis done for a policy paper by Gabriel Eidelman, Tomas Hachard and Enid Slack of the University of Toronto, published this past January as part of Ontario 360, a series of fantastically nerdy discussion papers about provincial economic policy.

The timing is important. When that team was writing its paper -- which examines how shared responsibilities are divvied up between the province and municipalities -- it had no idea the city would soon be grappling with a global pandemic, but still identified the funding imbalance as a significant issue.

And that’s exactly the point. Yes, Toronto is facing some daunting budget numbers during this pandemic -- a year-end budget shortfall of $673.2 million, and a projected 2021 shortfall of a whopping $1.5 billion. But these budget problems facing Toronto weren’t caused by COVID-19. They predate it. COVID-19 has just made the numbers bigger and made it harder to put off dealing with the underlying challenge.

A city that can count on just 11 cents per person from its provincial partner for an expensive (and important) file like social housing is a city that will never find itself on firm financial footing.

 

I don’t want to dwell on the late ’90s, but that’s where the problems really got started. The series of moves under then-premier Mike Harris that created the amalgamated city of Toronto and downloaded a bunch of responsibilities to it, like funding housing and transit, created an unworkable situation. The city, with the bulk of its money coming in via property taxes and user fees, can’t keep up with growing costs.

Is that an exaggeration? I don’t think it is. In my time watching city hall, I’ve seen three mayors try to get city finances under control. Mayor David Miller, a city builder, embraced the need for more revenue. The provincial government was an obstacle. Mayor Rob Ford convinced voters he could fix things by finding billions in government waste. He couldn’t find it. Tory positioned himself as a savvy businessperson who could make things work. The problems have remained the same.

Big council, small council -- none of it has made a difference. Toronto has been handed responsibility for too many programs without being handed the power to generate revenue to pay for them.

Governing this city is like trying to do neurosurgery with an ice cream scoop. You can be well-intentioned, but you simply don’t have the right tools.

Any serious conversation about COVID-19 recovery needs to start by acknowledging this. Without structural change, Toronto’s future will be one where city hall is perpetually on the edge of a budget crisis, regularly panhandling at Queen’s Park or in Ottawa for any cash that can be spared as austerity squeezes city services during a time when people will need them most.

Or Premier Doug Ford’s government can use this as an opportunity to finally right some of those late-90s wrongs. Figure out a fair arrangement for shared responsibility of files like housing, transit and homelessness. Give city hall the powers it needs to govern itself, whether that’s charter city status or just new taxing powers.

Structural change will certainly cost more than 11 cents per person, but long-term sustainability will pay off.