Budget reveals harsh reality facing Toronto
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- January 12, 2024
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A splash of cold water. . A splash in the face of city homeowners who could be looking at 10.5 per cent hike in property taxes, a splash in the face of the federal government which has failed to live up to its financial obligations to the city. The double digit wake up call is an indictment of past budgets and councils that put undue emphasis on keeping tax hikes low, even as city finances dictated otherwise.
The result was a crowd pleasing modest increase and the appearance of sound fiscal management even as the city’s foundation was rotting away. Indeed, until this year, the whole budget process had been about setting the increase first and then working the budget to make it all fit. But there was an uncomfortable truth in the significant financial shortfalls that were being kicked down the road.
Toronto Mayor Olivia Chow made clear in her mayoralty campaign last year that wouldn’t be her style and refused to bow to She would only commit that any increase would be "modest." The size of the tax hike proposed by municipal staff – and remember, it’s early days – would seem to stretch that election vow.
But this year's financial plan – and the significant tax hike make plain that budget chickens have come home to roost, to the tune of a $1.8 billion shortfall. For the average home, such an increase would mean an extra $321 a year, plus another $53 for a special fund for housing and transit.
Add in higher costs for waste management and water and it amounts to about $35 a month, not so onerous. But it comes at a time when household budgets are already strained with grocery prices and other rising expenses. If residents are to be asked to pay more, Chow and councillors need to make the case how those tax dollars will be spent smartly to make life better.
But recall last summer’s mayoralty election, when a decline in municipal services was lamented at almost every debate – overflowing garbage cans, water fountains that didn’t work and locked park bathrooms. A series of disturbing crimes on the transit system highlighted underlying social problems on city streets.
It all pointed to what is put at risk through short sighted penny pinching. This budget proposes extra funding for transit safety and security, a welcome citywide expansion of a crisis service and more shelter beds. The 2024 shortfall highlights too the extent of the systemic financial challenges facing Canada’s largest city.
In addition to the costs of delivering typical municipal responsibilities, Toronto faces outsized fiscal demands to , an ever growing shelter system, the country’s largest transit system that serves commuters from across the region, and massive infrastructure bills. As City Manager Paul Johnson underscored during Wednesday’s budget presentation, it’s all too much for property taxpayers alone to pay.
“The property tax base just cannot generate the kinds of resources that are required to adequately fund the infrastructure of cities, to adequately fund the full breadth and depth of programs that cities are now delivering,” he told reporters. It speaks to the importance of Toronto reaching a new fiscal arrangement with senior governments.
Credit to Doug Ford’s government for a promising start on this front. The will see a $382 million contribution to city operations this year. Getting the federal government to the table has proven more difficult. The immediate priority is to get the federal government to pay for refugee support. The city has no say in how many refugees the country accepts or where they stay when they get here.
Yet it’s forced to pay the bills. Every night 4,300 shelter beds in Toronto are occupied by refugee seekers. That’s why this budget contains a strong dose of political brinksmanship. The city says it needs $250 million from Ottawa to reimburse the costs of supporting refugees. If the federal government refuses to pay, that could mean a further six per cent increase in property taxes, which will be known as the “federal impact levy.” That most certainly has gotten Ottawa’s attention.
There's a good chance that by the time council votes on the final budget in mid February following weeks of discussion and debate, the actual tax hike will be lower. But there’s a message underlying this budget – there’s a price to be paid for city services. That bill has come due..