John Tory ramps up appeal for fiscal help to fill Toronto's $815M budget gap

Toronto Mayor John Tory is ramping up his appeal for financial help from the province and federal government, stressing that the city needs them to step up and fill an $815-million budget deficit created by the COVID-19 pandemic.

In a letter to both Premier Doug Ford and Deputy Prime Minister Chrystia Freeland on Thursday, Tory stressed that if both orders of government don't provide financial relief, they risk stifling the economy of Canada's largest city.

Tory wrote that he is repeating his request to Ottawa and Queen's Park "to address the continued impacts COVID-19 is having on our city's finances, "so that we do not have to make deep cuts to services our residents require, impose massive tax increases they cannot afford, or implement reductions to our capital budget which will eliminate thousands of jobs and threaten our economic recovery.".

City staff, and Tory himself, have warned for months that Toronto faces the steep budget shortfall that it must fill by law. But with limited revenue streams to draw from to balance its books during the pandemic, Toronto has been forced to make annual requests to the other levels of government to help get it into the black.

Tory said the massive deficit has been caused by low transit ridership, the need to bolster protections for people in shelters, and various lost revenues. 

"It's the COVID hangover completely," he said.

Tory also stressed that while both governments have given positive indications that they will come to the table to bail the city out, no one has produced a signed cheque. And with less than 50 days left in the city's fiscal year, the time for action is now, he said.

""My message today is very simple. It's time for the talking points to be brought to an end. And it's time to sit down."

City is 'fragile,' Tory says

Tory also warned of the consequences of inaction, which could result in property tax increases, service cuts or cancellation of capital projects.

"We cannot tax our way out of this, what happened with COVID," he said. "And we can't cut our way out of it. Those will both do damage to the city at a time when it doesn't need to have damage done to it. It's fragile."

Federal Housing Minister Ahmed Hussen, who was with Tory at an event Thursday, stressed that while he could not speak for Freeland, he has made the case for Toronto to his government.

"As minister for responsible for housing, I've always made it a point to make sure that Toronto is leveraging federal investments in housing, federal investments to tackle homelessness, and we have a great partnership," he said.

A spokesperson for Premier Doug Ford said the province has provided $4 billion in support to municipalities across Ontario to help with pandemic recovery. The province has asked the Trudeau government to match an additional $1.3 billion for municipalities, said Christine Wood in a statement.

"Ontario is ready and willing to contribute more to support municipal partners, but we cannot do it alone," she said. "We need to have the federal government as a partner to ensure Ontario's municipalities can continue to deliver vital services."

Cities need more revenue tools, expert says

Enid Slack, the director of the University of Toronto's Institute on Municipal Finance and Governance, said cities have few options to raise revenue. It could be time to think about giving councils more tools to balance their budgets, she added

"This is a difficult task for them with those limited sources of revenue, and perhaps it's time to think about giving the city access to income or sales tax revenues, which would bring in more significant amounts of revenue," she said.

Slack said the current funding arrangement between cities and upper tier government has been around for decades and revisiting who delivers what services would also be helpful.

"There is a structural problem in the sense that their expenditures, and other demands on municipalities, to provide services are growing," she said. "But the sources of revenue stay the same."

Toronto's budget process gets underway over the next month, wrapping up early in 2023.