Kelly McParland: Toronto the Broke learning the hard lesson that it no longer holds the allure it once did

The city cannot continue to raise revenue by nickel-and-diming newcomers and suburbanites

Nationalpost.com
Jan. 24, 2023
Kelly McParland

Among the many challenges of living in Canada’s biggest metropolis, one impulse is never far from Toronto’s collective consciousness: getting other people to pay its bills.

In Ontario, municipal governments aren’t legally allowed to run deficits, but every year the country’s financial centre and most populous city discovers itself deep in a hole. In November 2020, it projected a shortage for the year ahead of $1.8 billion. Twelve months later, it anticipated a shortfall of $703 million. Its recently released 2023 budget adds $484 million still needed from last year to $1.08 billion for this year, for a combined $1.6 billion.

The figures are distorted by heavy COVID-related expenses but the annual scramble to fill the hole is a traditional rite. And the preferred solution is always the same: a plea for the federal and provincial governments to kick in more dough. “It’s not lost on me that those two governments are both running a surplus at the moment. We’re not,” noted Mayor John Tory in discussing the latest figures. And what else would anyone do with a surplus but immediately spend it?

There are significant restraints -- some certainly debatable -- on the ability of towns and cities to raise revenue, even with the new “strong mayor” powers introduced by Ontario Premier Doug Ford. Nonetheless, one of Toronto’s biggest barriers is self-imposed: the city’s property taxes are lower than almost anywhere else in the province, and it makes a fetish of refusing to increase them.

Since he became mayor two terms ago, Tory has stuck to a pledge to keep increases in line with inflation. Even with this year’s 5.5 per cent residential property tax hike, Toronto still trails the belt of suburban communities surrounding it, and beyond.

The real estate website Zoocasa surveyed 35 Ontario municipalities and found Toronto’s tax rate to be the lowest of the bunch. Though it vies with Vancouver for Canada’s highest-priced homes, a $1 million property in Hamilton, Oshawa, Kingston or London would pay double Toronto’s tax. In Windsor, it would be triple. (Though it’s not likely you’d ever find a home in central Toronto priced at a measly $1 million.)
The theory is that granny and gramps shouldn’t be impoverished by high taxes on the home they bought a generation ago at a reasonable price. It’s not a bad theory, but it doesn’t explain why newcomers who are able to pony up millions to get into the housing game should get a perpetual break on the services, or why all the grannies and grampses in the rest of the province seem able to handle higher rates.

Tory is hardly the first mayor to resist billing Torontonians for their full expenses. His predecessors opted for myriad fees and licences, including a land transfer tax that forces newcomers to pay up to enter the housing market. Local politicos promote all sorts of schemes to raise money, usually focused on getting other people to kick in more to the pot.

One favoured idea involves slapping tolls on the two main commuter routes in and out of the city, on the assumption that suburban commuters would bear most of the brunt. Tory thought he’d won provincial approval for a toll plan a few years back until the premier of the day backed down following an uproar from suburban voters.

In the latest push, a group of bright sparks on the new council have seized on the notion of taxing commercial parking spaces, figuring they could rake in $500 million for the annual kitty. Homeowners would be exempted, of course.

Problem is, no one seems to have noticed that Toronto businesses are struggling to recover from years of COVID-induced damage. Hundreds of outlets from big chains and small operators alike have shut their doors, the vital tech industry is in meltdown, office towers echo with empty space and are desperate to get people to return to the city, while new construction projects continue to add to the oversupply.

Toronto sees itself as the engine of the economy, which shares its bounty generously and should thus be recognized by way of a little help with the bills. There is merit to this view: keeping roads and transit in working order is a hefty expense and has been getting increasingly out of hand.

This year’s Toronto Transit Commission subsidy will total $960 million, despite a fare increase. Public safety is another burgeoning cost in a city with a growing array of crime concerns. What’s missing from the equation is the pandemic-driven evidence that not everyone is eager to spend their days amid the city’s office canyons, now that they’ve discovered they don’t have to. Many of the busy bees of the Toronto hive are happy making their honey at home, and jacking up the cost and bother of returning to the fold isn’t going to change their minds.

Though immigration continues to feed in new arrivals, the pandemic saw more people moving out of the city than moving in. The fastest-growing municipalities around the Lake Ontario population belt have names like East Gwillimbury, New Tecumseh, Thorold, Bradford West and Milton, all distant outposts on the ring of border communities that keep getting a longer and more expensive commute away from the bank towers and cramped condominiums that downtown dwellers imagine retain some of the allure they once held.

They may be in for a surprise. Like it or not, other people may decide Toronto needs to look somewhere other than their pockets for a means out of its dilemma. Raising their costs isn’t a good place to start.