Mayor John Tory says budget is ‘just right’ with property taxes kept low

But the city’s $11-billion operating budget relies on a hot housing market, one-time strategies and as such is being called unsustainable.

Thestar.com
Feb. 6, 2018
Jennifer Pagliaro

Drawing on the fairy tale of Goldilocks and the Three Bears, Mayor John Tory called the budget approved by his executive committee on Tuesday “just right.”

It balanced, he said, the desire to keep the city “affordable” by keeping property taxes low, with the need to invest in services like transit.

“We’re doing things that city council in the past postponed doing,” Tory said. “I have some councillors and other critics out there who say that we’re not investing enough in the city, we’re not spending or taxing enough. We should tax more and spend more. Then I have other councillors who say we’re spending too much. And I think we’ve got this just right.”

The budget executive committee has recommended for approval would see residential property taxes increased by 2.1 per cent -- keeping with the rate of inflation as has been the direction from Tory and a majority of council this term. For the average homeowner, with a property assessed at $624,418, their property tax bill will be $2,907 in 2018 before the provincial education tax is included.

Council has the final say at a meeting that starts Monday.

But the $11-billion operating budget depends on a hot housing market, relying on the more than $800 million that is estimated to be collected from the municipal land transfer tax (MLTT) in 2018.

And that reliance on the land transfer is exactly what the real estate industry warned against on Tuesday, with the Toronto Real Estate Board releasing numbers that showed a drop in home sales in January compared to last year. That should be a wake-up call for council, TREB said.

Toronto city manager Peter Wallace told Tory and his executive bluntly on Tuesday: “If MLTT declines, we’ll have an issue.”

If sales sag, Wallace outlined that council would need to make a mid-year budget adjustment -- either find new sources of revenue or cut programs and services.

In order to pay for decisions made last year and carrying over from previous years, like a two-hour TTC transfer and poverty reduction strategy goals like student nutrition programs, the recommended budget draws on one-time solutions. Those include pulling millions out of reserves and deferring some payments for a total of $76 million in 2018. Those measures, Wallace has warned, are unsustainable.

Budget chief Councillor Gary Crawford reiterated his view that this is a “good news budget.”

“In general, it’s a good strong budget that I think will meet all our service needs across the city,” executive member Councillor James Pasternak said.

According to the staff presentation, the amount of spending per capita has declined in the last eight years, meaning city spending is not keeping up with the quickly growing population.

Councillor Janet Davis questioned the point of debating the budget when the direction to keep property taxes low had already been set as the first item of business.

“I don’t have any questions because there’s no way to change this at this point,” she said.

Frontline advocates said the budget recommended by executive committee doesn’t go far enough to help the city’s most vulnerable residents.

Outside the meeting room, Councillor Kristyn Wong-Tam joined providers of services to homeless Torontonians to demand a stronger city response to an ongoing crisis in capacity and unsafe conditions.

Kapri Rabin, executive director of Street Health at Dundas and Sherbourne Sts., said the proposed budget really only offers 281 new shelter beds for 2018 after you deduct transitional spots for youth. The city plans to open 1,000 new beds over three years.

“Why not open the full 1,000 beds this year,” and another 500 as quickly as possible, she said. “We don't want to be here next year asking for the same issues.”

Wong-Tam said she plans to make a motion to open 1,000 beds this year at council. She noted that on Dec. 6, council rejected her similar proposal but then had to scramble to ramp up the city’s response when extreme cold strained the already overtaxed shelter system.

“This is so critical because it is a life-and-death situation,” she said. “I hope that city council will not make the same mistake on Feb. 12 as they did on Dec. 6.”