Toronto election reality check: How the top mayoral candidates would fix city finances -- and what the experts say

Thestar.com
June 19, 2023

The pandemic has left Toronto cash strapped. Here’s how the top mayoral hopefuls say they’ll dig the city out of its financial hole -- and what three experts think.

The issue:

$16.16 billion: Toronto’s 2023 operating budget.

30 per cent: Share of this year’s budget funded by property taxes, with provincial and federal money as the second biggest funding stream.

$1.5 billion: Toronto’s approximate, combined budget shortfall for 2022 and 2023, as of late May, driven in large part by a pandemic-related drop in TTC ridership and increased shelter costs.

 

5.5 per cent: Former mayor John Tory’s last property tax increase. Although below the inflation rate, council also approved a 1.5 per cent increase in the “city building” levy. For years, Toronto’s residential property tax rate has sat lower than any other city in Ontario.

The promises:

Ana Bailao

Budget shortfall and intergovernmental relations: “Make sure” province assumes responsibility for Gardiner Expressway and Don Valley Parkway, which she says will save more than $200 million annually; like several candidates, push for a “new fiscal framework” between Toronto and senior governments, including a portion of HST revenue.

Contracts: Review all major contracts and implement “monitoring and reporting” mechanisms to track contract performance; expand auditor general’s mandate to review private contracts; and appoint a member of executive committee to serve as “Value for Money Champion.”

Taxes: Keep property tax increase at or below inflation; offer tax breaks to landlords who rent spaces to arts organizations below market rates, according to CBC News.

Expert takes:

Almos Tassonyi, executive fellow at the University of Calgary’s Urban Policy Program and former senior economist with provincial Ministry of Finance: Uploading the Gardiner and the DVP to the province? “A negotiating point … She cannot guarantee that.” As for new funding deal with senior governments: “Probably does need revisiting. There are a lot of unfunded mandates between the levels of government.” However, that’ll be tricky: “I think that Queen’s Park will be very reluctant to enter those negotiations.” A share of HST revenue might seem simple, but it’s actually quite technical. Lastly, Bailao’s “Value for Money Champion?” “Nice title. I don’t know that it’s going to make that much of a difference.”

Murtaza Haider, director of research at the Urban Analytics Institute of Toronto Metropolitan University: The Gardiner and DVP are part of a larger provincial road network. “So, logically, it makes sense that the province should be involved.” Bailao’s commitment not to increase property taxes above inflation isn’t all that surprising. (Tax hikes don’t typically sell.) But if the province doesn’t step in, “it’s very difficult to keep that promise.” To sum up: “There’s not much she can do or any mayor can do ... Their success will depend upon how less confrontational they are with the province.”

Brad Bradford
Budget shortfall and intergovernmental relations: Open up tendering for city projects to non-unionized workers, which Bradford says will save more than $200 million annually and expedite development; negotiate a new funding deal with Queen’s Park and Ottawa.

Taxes: Keep property tax increase at or below inflation.

Expert takes:

Haider: In an effort to fast-track Toronto’s sluggish construction process, Haider is favourable to open tendering. But he couldn’t judge whether Bradford’s $200-million estimate was realistic. On taxes: “If the province doesn’t step up, there’s nothing else there but to increase the property tax or cut services. One or the other.”

Tassonyi: Given Bill 23, Tassonyi again cast doubt on the viability of a new deal with the province, though it’s a “necessary” discussion. Bradford, Bailao, Anthony Furey and Mark Saunders have all promised not to increase taxes above inflation, but considering the city’s finances: “I don’t think they’ve got a choice. I think they are going to have to increase the property tax rate.”

Olivia Chow
Budget shortfall and intergovernmental relations: Push for a new fiscal deal with upper-level governments; replace elevated eastern portion of Gardiner with ground-level boulevard connecting to DVP, which she says would save hundreds of millions of dollars.

Taxes: Increase property taxes by a “modest” amount, saying it would be based on budget demands and economic conditions in 2024; broaden eligibility for property tax deferral programs; triple vacant homes tax from one to three per cent; grow City Building Fund, from 1.5 per cent to 1.83 per cent; increase the municipal land transfer tax from 2.5 to 3.5 per cent for homes above $3 million and higher brackets for more expensive homes.

Expert takes:

Jan De Silva, president and CEO of the Toronto Region Board of Trade: Chow’s push to increase the vacant homes tax: “There’s no evidence that there’s a huge vacancy situation in the city … It’s not raising much.” As for increasing the land transfer tax for homes over $3 million: “It’s very easy in a campaign to talk about just taxing the rich.” But De Silva pleaded caution: “We do know of executives and headquarters of businesses that ultimately relocated out of Canada to lower-cost jurisdictions because at a certain point, it just wasn’t worth it.”

Tassonyi: Chow’s refusal to put a number on her property tax increase “reflects a certain amount of caution and a certain amount of realism.” Expanding eligibility for tax deferral programs is a viable option: eligibility is quite “stringent,” and very few people actually apply. Increasing the vacant homes tax? The “jury is still out” on whether it discourages speculation. Land transfer tax’s revenue potential is unpredictable as it depends on the state of the market.

Anthony Furey
Budget shortfall and intergovernmental relations: Independently audit city hall finances; complete 90-day review of services and activities; implement open tendering; freeze hiring for “non-core” services; explore revenue collection from Greater Toronto Airports Authority (GTAA); seek federal carbon tax rebate; review post-secondary education requirements for city positions; file $1-billion lawsuit against Metrolinx for damages related to Eglinton Crosstown project; “seek consensus and alliances” with provincial and federal governments.

Taxes: “No. New. Taxes.” (Furey’s campaign later clarified that he’d keep the average property tax increase at or below inflation.)

Expert takes:

De Silva: It makes sense to review city spending. “That said, no candidate will be able to find $1.1 billion in efficiencies to make up for the cost of programs being delivered in areas that are the responsibility of other levels of government.” Also, Furey’s idea to explore revenue collection from the GTAA? “A terrible idea.” Most of its lands lie outside Toronto’s borders, “making it an especially odd choice as a target for new municipal taxation.”

Tassonyi: Independent audit? “They don’t come up usually with very much.” A 90-day review of services and activities seems like too short of a time frame, according to Tassonyi. In reaction to open tendering, which Bradford’s also pushed, he referred to “union busting.” And Furey’s promise of no new taxes: “It’s not a helpful position.”

Mitzie Hunter
Budget shortfall: ask council to “authorize changes to operating contributions to and operating draws from selected reserves,” drawing more than $800 million from the City Building Fund, updating certain cost assumptions, and “borrowing from internally managed accounts.”

Intergovernmental relations: Work with other cities to seek share of one per cent of the HST, which she says would raise $800 million for Toronto; secure federal funding for refugee-related costs and new affordable housing; seek funds from province for COVID-related health costs; work to secure federal and provincial funding for transit; demand province immediately reimburse for lost development charges; and push Queen’s Park to reduce education property tax by 50 per cent, generating $1 billion annually, according to CBC News.

Taxes: Introduce six per cent property tax increase, ($216 per year for an average home, she says), three per cent ($108 per year) for households with income under $80,000, provide additional relief for moderate and low-income seniors, which she says would allow more than half to pay no increase at all.

Expert takes:

Haider: “The fact that she has come up with a detailed plan should merit a lot of respect.” Whether Hunter wins or not, her platform document should be considered by the next mayor. Still, he raised concerns about costs associated with elements of her plan, including the proposed affordable housing commission. “She’s creating layers of bureaucracy that do not exist now.” He also wonders how much revenue the city would raise with these tax exemptions.

Tassonyi: Hunter’s approach is “plausible, comprehensive and likely achievable with a ‘modest’ tax increase.” Internal borrowing, as Hunter suggests, is “standard practice.” She’s described promises to secure an exclusive, wide-ranging deal between Toronto and senior governments as unrealistic. Instead, she’s focusing on key funding areas. “I think that’s an intelligently plausible strategy in how to deal with senior levels of government.”

Budget shortfall and intergovernmental relations: Develop 10-year strategic plan to fund social housing, the TTC, health care, refugee settlement services and court services and negotiate a deal with senior governments to receive additional funding for such areas; reduce spending on consultants, which he says would save about $14 million; cancel elevated rebuild of eastern Gardiner, instead connecting the expressway to DVP at ground level, which he says could save more than $500 million; and “targeted spending cuts,” according to CBC News.

Taxes and other revenue streams: Increase property taxes by two per cent above inflation, raising an additional $390 million over five years and costing the average homeowner $67 per year; create a “community safety fund” by freezing police budget for three years, which he says would generate $115 million over three years; establish a commercial parking lot levy that would raise $200 million every year; “leverage” two per cent increase in hotel tax, resulting in $50 million; and halve property taxes for new purpose-built rental buildings if developers “offer five per cent of units at below market rates,” according to CBC News.

Expert takes:

Tassonyi: “Any sound municipal administration would be doing strategic planning -- whether that actually results in any additional funding is an open question.” And Matlow’s identified relevant funding areas. Several of Matlow’s other proposals are “possible or being explored,” including the parking lot levy. Matlow likely would need provincial approval to halve taxes for new rental buildings offering below-market units.

Haider: The math for Matlow’s two per cent property tax increase appears accurate, but for “stabilizing” the police budget for three years: “You need a lot of co-operation from the police union to be able to deliver on this promise.” Police budgets are also unpredictable and partly dependent on what kind of crimes occur and how expensive it is to respond. And the commercial parking lot levy: “How will this benefit the businesses?” Especially, when many downtown businesses are struggling due to office vacancies.

Mark Saunders
Budget shortfall: Review budget to find efficiencies and where services can be better “aligned”; implement a “program-by-program” review; revisit $400 million renovation of St. Lawrence Centre for the Arts; make budget process more transparent and broaden consultation; meet with auditor general and develop a “standard of implementation” ensuring recommendations are considered; work with city manager to optimize departments, centralize work and eliminate duplications, like IT; and require new pilot projects set aside funding to wind down and introduce benchmarks of success.

Taxes: Keep property tax increase at or below inflation.

Expert takes:

Haider: “He’s smart enough not to make any promises.” However, parsing the budget for efficiencies won’t do much to address the budget hole. “If there was money to be saved, John Tory’s team would have found it.”

De Silva: Saunders and others have said Toronto can’t tax its way out of its financial struggles, especially with the rise in the cost of living. “Taxes alone will not solve our problem, but taxes have to be part of the solution.” She appreciates Saunders’s (and Furey’s) push to review costs and services: “We also need to look at our service delivery mechanisms in terms of what we can afford and how do we be more productive at it.” Lastly, she noted his experience running a billion-dollar police budget, which she said was valuable.