Toronto city councillors pledge to avoid tax hikes, service cuts in face of $1.3B shortfall

Toronto city councillors say they are committed to avoiding tax hikes or service cuts in the face of a bleak new report on the city’s financial health, though averting those measures will require major funding from the provincial and federal governments.

A new city report that analyzed the first half of 2020 projects a shortfall of $1.34 billion by the end of the year. The figure is largely attributed to a combination of lost revenue and increased spending to combat the novel coronavirus during the spring and summer.

The report, and measures to lift the city out of its dire financial situation, are expected to be discussed Wednesday at Mayor John Tory’s executive committee.

“I think we are going to get through it, but it is going to be a very long, hard road ahead,” said Coun. James Pasternak, who represents Ward 6, York Centre and sits on the executive committee.

The report also offers updated figures about the financial effects in several key areas during the spring and summer, including:

  • $272.9 million in losses due to a drastic decline of ridership on the TTC.
  • $11.4 million in losses due to increased spending at Shelter Support and Housing Administration.
  • $10.9 million in losses due to lower rates of ticket issuance and a partial suspension of enforcement

The $1.34 billion shortfall projection accounts for $542.8 million in savings found by the city so far in 2020. The report attributes those savings to various mitigation strategies, such as spending adjustments and “workforce restraints.” The city placed nearly 10,000 employees on temporary leave at the peak of restrictions in the spring.

The bulk of the city’s losses were the result of lost fare revenue on the TTC. Ridership plummetted to just 14 per cent of typical levels in late April. (Evan Mitsui/CBC)

Despite the massive shortfall, members of the executive committee pledged to avoid tax increases or service cuts, and said the city could not be reasonably expected to find further savings or efficiencies.

In order to recover, and balance the city budget as required by law, they said Ontario will have to commit to fully covering the remaining losses.

“We’re hopeful and confident that the provincial government will recognize the needs of the City of Toronto,” said Coun. Gary Crawford, the city’s budget chief and representative for Ward 20, Scarborough Southwest.

“The hope is that we would receive the entire amount of funding that we need.”

Ontario to distribute money through Safe Restart Agreement

The city is anticipating $668.6 million in funding in the first phase of the Safe Restart Agreement, a joint program by the federal and provincial governments that will offer up to $4 billion to help Ontario municipalities recover from the pandemic.

The arrival of that funding will leave the city with an estimated $673.1 million shortfall, though there is a further $2 billion in funding available as part of the program, to be divided across the province.

The Ontario government says municipalities are finalizing their requests for the next round of funding now, though the bulk of it, which is earmarked for transit, will only be available after end-of-year financial reports are filed by March 31, 2021.

It is not yet clear how much of the city’s remaining shortfall will be covered through the program.

“We look forward to continuing to work with our municipal partners to get Ontario back on track,” said a spokesperson for Minister of Municipal Affairs and Housing Steve Clark.

Coun. Ana Bailao said the city needs information about future funding “rather quickly” in order to rule out the possibility of tax hikes or service cuts.

“Everybody is working to make sure that we continue to have services available to the residents of Toronto,” said Bailao, another executive committee member who represents Ward 9, Davenport.

“We need the announcement on the second wave of funding.”

Uncertainties could complicate further financial needs

A resurgence in COVID-19 cases and the prospect of tightened restrictions will likely create additional financial challenges during the end of 2020 and into next year, Crawford said.

Other problems, such as lower-than-normal ridership on the TTC, are also likely to continue into 2021, meaning future funding requests may be different from what the city can forecast today.

“We do not know and we cannot predict where we’re going to be going into the future,” Crawford said.

“We still have a concern for 2021.”

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