Archived columns and blog posts by Matt Elliott

Proposed Toronto property tax hike could be start of more to come

By: For Metro Published on Wed Jan 21 2015

Toward the end of his presentation on the city’s draft 2015 operating budget, Toronto’s chief financial officer Rob Rossini turned to newbie budget chief Coun. Gary Crawford and jokingly asked, “You really wanted to be budget chief, didn’t you?”

People laughed.

Rossini had just gone over budget projections for the next two years, and the projections didn’t look so good.

The 2015 draft operating budget unveiled Tuesday calls for a 2.25 per cent residential property tax increase, needed to offset a pretty deep budget gap, with another 0.5 per cent increase on top for the Scarborough subway.

But if this year’s budget was tough, future budgets look even tougher. In 2016, the city’s looking at a $304-million budget hole, even after an inflationary property tax increase is factored in. In 2017, the figure is expected to be $231 million.

In other words, as Rossini implied, Mayor John Tory’s budget chief has a really hard job ahead of him.

That was the real story of Toronto’s budget launch: Some good news mixed in with a not-so-subtle hint that there’s still a lot of work to come.

For the first time in four years, Toronto’s government plans to seriously invest in programs and services. This makes sense, considering that the city is growing at a rate of about 30,000 new people per year — a growing city needs growing services.

So new TTC spending to allow for shorter wait times? In a crowded city, that’s a no-brainer. So is the planned investment in poverty reduction and shelter spaces.

But the good news is tempered by concerns about the city’s fiscal footing going forward.

This year, Toronto is relying on some $86-million in one-time “special assistance funding” from the provincial government. Details are still coming forward, but the money looks to be offered in the form of a repayable line of credit.

And, sure, that works as a quick fix for this year’s budget, but there’s still the question of next year, and the year after next year, and so on.

Not only does the city forecast big budget shortfalls, the city is set to issue hundreds of millions in new debt over the next few years to pay for needed infrastructure and the Scarborough subway — so much debt that Toronto will come very close to city council’s debt limit in 2020.

Making things worse, the city’s capital plans show the repair backlog for infrastructure will continue to grow, even as the city takes on debt.

No one could realistically expect Tory or Crawford to fix this stuff with their first budget, but they should realize through this year’s budget debate that the future might not be so bright.

These problems can’t just be kicked down the road.

If Crawford really does want to be budget chief — and Tory really wants to be an effective mayor — they should start talking about long-term solutions now.

This post was originally published at on 2015-01-21T00:00:00.000Z

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Matt Elliott

City Hall watcher, columnist and policy wonk in Toronto.
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