What you need to know ahead of Toronto’s 2023 budget proposal

Mayor John Tory signalled last week that despite a pandemic-driven shortfall of nearly $1 billion, his administration is on track to avoid catastrophic cuts to front-line services.

Thestar.com
Jan. 9, 2023
Ben Spurr

As he prepares to launch what he describes as the most difficult city budget of his time as mayor, John Tory is promising to shield residents from the “excruciating financial challenges” bearing down on Toronto.

In a series of media announcements last week ahead of the official launch of the 2023 budget process on Tuesday, Tory signalled that despite a pandemic-driven shortfall of nearly $1 billion, his administration is on track to avoid catastrophic cuts to front-line services.

Full details won’t be public until next week, but the mayor promised there will be more money to hire police officers and paramedics, keep park washrooms and fountains open longer, and increase subsidies to social housing, all while keeping the annual property tax increase below the rate of inflation.

But to make up for the COVID-19 shortfall, and to be able to afford the new spending, Tory has drafted a plan to pause a host of city infrastructure projects. Critics say it’s a risky strategy that only papers over Toronto’s financial problems, and will set the city on a path to long-term decline by allowing its roadways, transit system, parks and other facilities to fall further into disrepair.

“The mayor is proposing that we burn the furniture to heat the house,” said Coun. Gord Perks (Ward 4, Parkdale--High Park), one of Tory’s council critics.

“Two years ago the mayor was talking about building back better, and clearly we’re building back worse.”

Tory concedes that delaying infrastructure work could have negative consequences, and he’s still hoping the provincial and federal governments will come to the rescue with a COVID-19 bailout that would allow him to abort his plan.

But he frames his approach to this year’s budget -- the third crafted in the shadow of the pandemic and the first he will oversee using his new “strong-mayor” powers -- as a continuation of the “careful, steady, responsible financial management that has been a hallmark of my three administrations.”

The focus has been “to protect the services we need right now,” he said.

Continuing COVID-19 woes

The mayor said last week that the city estimates its pandemic-related budget gap, driven largely by lost transit revenue and additional pressures on the shelter system, is about $900 million. That’s down from an earlier estimate of $1.49 billion but still a yawning gap considering last year’s operating budget was $15 billion.

Between 2020 and 2022, the provincial and federal governments agreed to provide more than $3 billion to offset Toronto’s COVID-19 shortfalls. But despite appeals from Tory, neither Ottawa nor Queen’s Park has pledged more for 2023, and the mayor said discussions with the federal government in particular have been “difficult.”

Balanced, with a catch

According to the mayor’s announcements, highlights of this year’s budget include a controversial plan to boost the police budget by $48.3 million and hire 200 officers, $3.5 million to support the legalization of rooming houses, and $2.86 million to keep park fountains and washrooms open longer. There’s also $53 million more for the TTC, although fares will go up 10 cents, and wait times and vehicle crowding could worsen as the agency adjusts service downward.

Tory said the operating budget will be balanced, as required by provincial law, and new spending will be possible because of revenue from the property tax increase, the growth of assessment rolls, and savings identified by staff.

But the city will account for the roughly $900 million in unfunded pandemic-related pressures separately from the rest of the budget, and continue pressing the federal and provincial governments to pick up the tab.

If the other governments don’t come through, the mayor’s plan is to reduce spending on this year’s capital budget, and reallocate that money to the city’s operations.

Tory hasn’t said what capital work could be cut, but he said no single major infrastructure project is on the chopping block. However, a high-level list of work council already agreed to pause in 2022 due to COVID-19 pressures included state-of-good-repair projects for the TTC as well as rehabilitation of major and local roads, and Tory conceded work that could be put on hold this year “still would be significant to local residents.”

Coun. Alejandra Bravo (Ward 9, Davenport) said she worries that could mean more alarming incidents like the large sinkhole discovered in her ward in late November, which forced the closure of Dundas Street West for weeks. Other infrastructure Torontonians rely on is also at risk, she warned.

“One of the things that’s making TTC less attractive is the massive, massive backlog in repairs to the actual functioning of the system, which results in delays and results in service that isn’t reliable,” she said.

“We’re dealing every day with what I think everyone can see is a crumbling city.”

Matti Siemiatycki, director of the University of Toronto’s Infrastructure Institute, said moving money from the capital to the operating side of the budget allows municipal governments to avoid immediate and unpopular cuts to services. But it’s not sustainable.

“You can get away with it for a short period of time without seeing huge impact, and yet over time the deferred maintenance stacks up” and leads to failing infrastructure that’s increasingly expensive to fix, he said. “Once you get behind, it’s really hard to catch up.”

Unknown provincial housing bill costs

Bill 23, the sweeping housing legislation that Premier Doug Ford’s government passed in November, will reduce or eliminate development charges on some new development projects. The province says that will spur construction and address the housing crisis, but city staff has estimated it could cost Toronto more than $200 million a year, with potential impacts expected this year.

Municipal Affairs and Housing Minister Steve Clark has promised to make Toronto “whole” for any losses it suffers as a result of the bill. But the province has also suggested the city is mishandling its development charge revenue, and Clark’s promise of compensation is subject to an audit of city finances.

Tory said last week the city is working with the province to select an auditor and finalize the terms of the review, but he was “very confident” it would vindicate the city, and he’s hoping Bill 23 will have no major impact on Toronto’s 2023 finances.

First strong-mayor budget

The Ontario government’s controversial strong-mayor legislation has granted Toronto’s mayor more control over the city budget. While city staff were previously responsible for presenting the annual spending plan to council and the public, the task now falls to Tory, who legally must table a budget by Feb. 1.

The city budget committee will launch the draft budget on Tuesday, and it will be followed by a committee review Thursday and Friday, and public feedback next week, before going to council for approval Feb. 14. Council can make amendments, but the new law gives Tory the ability to veto any changes that aren’t supported by two-thirds of council.

The timelines are shorter than before the strong-mayor legislation and involve fewer committee meetings, which advocates like Jin Huh, executive director of Social Planning Toronto, say will discourage residents from participating in the process.

“How we get a better budget is more people who can see different perspectives involved in it,” she said. “Right now, very few people will have a say in the budget really.”

How to get involved

Residents can make submissions about the 2023 budget online or in writing, or by attending one of four meetings being held across the city on Jan. 17 and 18, either virtually or in person.

Speakers can register by emailing buc@toronto.ca or calling 416-392-4666 by 4:30 p.m. on Monday, Jan. 16. For more information visit the city’s website.