Mayor Olivia Chow and her allies have been signaling for months that a serious property tax increase is coming, and city residents will get their first sense of what the numbers will look like today when Toronto’s budget process launches.
City staff will present a proposed spending package at a budget committee meeting Wednesday, kicking off a month and a half long process. It’s expected to outline the more than $16-billion operating budget and to what degree taxes could jump in Toronto. It comes as the city faces a $1.8-billion deficit. All municipalities must balance their budgets by law.
Last week, budget chief Shelley Carroll told CBC Toronto that residents should expect a “substantial” tax increase as the city grappled with the fiscal crisis.
“There’s definitely going to be a property tax increase,” she said.
“I’ll go so far as to say it will be substantial. We really have reached a point where if we’re having to solve our own problems, it means a substantial increase.”
Her comments echo Mayor Olivia Chow’s remarks last month that the city would need to “do our share” to address the financial issues.
“You have to prove and show that you’re willing to pay for things first or else you wouldn’t get other people to come on,” Chow said in December.
Financial hole years in the making
Toronto’s strained finances take centre stage during every annual budget debate. But the problem has become more pronounced since the pandemic as the city took on hundreds of millions in unexpected costs. TTC fare revenue plummeted and the number of unhoused people seeking space in Toronto’s shelter system spiked.
And that problem has been compounded by thousands more refugee claimants and asylum seekers arriving in the city and turning to the shelter system for help.
Toronto recently struck a new financial deal with the province to address the fiscal crisis. That deal will see Ontario upload the Gardiner Expressway and Don Valley Parkway and relieve billions in capital pressure from the city over the next decade.
Premier Doug Ford’s government has also committed hundreds of millions to Toronto to help address transit and shelter costs, but some of that funding is contingent on matching dollars from the federal government. Thus far, Ottawa has not committed that money.
Rate of inflation tax hikes in Toronto over last decade
But some critics have said city council has not done enough to address its own financial problems by largely keeping tax increases at, or around, the rate of inflation over the last decade. Last year, former mayor John Tory and council hiked property taxes by 5.5 per cent, and added a 1.5 per cent capital city building levy. That amounted to the largest tax increase in Toronto since amalgamation in 1999.
Former city councillor John Filion said the financial trouble at the city has been building for over a decade, and part of the problem has been councillors unwilling to deliver bad news to constituents.
“The council has largely ignored the warnings of a succession of city managers saying you either have to cut back on services if you want lower taxes, or if the public wants good services … you’re going to have to raise taxes to do it,” he said.
Filion said he thinks Chow will strike a tone of optimism in her budget, even though he expects it to call for a property tax increase over the rate of inflation. But navigating the public process over the next month, before she unveils her version of the budget in early February, will be challenging, he said.
“A win [for Chow] is the public accepting that this is an extremely difficult exercise,” he said. “And there will have to be a pretty significant tax increase.”
Toronto’s budget road show begins next week
Wednesday marks Toronto’s first budget committee meeting at city hall, but consultations on the spending package will reach every corner of the city.
Starting Jan. 22, civic centres across Toronto will host their own public feedback sessions and deputants can register to speak. The budget document presented Wednesday is a proposal and will not be not finalized until Feb. 14, Carroll said.
Carroll added that she will be attending as many of the sessions as possible to hear directly from city residents. It’s important people participate and let her and other city councillors know what services they need and what could be cut, she said.
“There really is still worth in spending the month of January looking at what we launch on Jan. 10,” she said. “And reaching out and telling us: can’t live with that one. That’s a good idea … [or] I can’t live with that.”
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