Federal budget offers no bailout for Toronto's pandemic-induced shortfall

From grocery rebates to expanded dental care, the federal government's 2023 budget offers billions in spending on new initiatives for residents across Canada, but contained nothing specific to offset a pandemic-induced budget hole plaguing Toronto. 

For months, the city has been appealing to the both the federal and provincial governments to step up and help fill a $933-million budget deficit created by the COVID-19 pandemic, or risk stifling the economy of Canada's largest city.

Ontario responded with a one-time cash injection of $235 million last month — a move city officials had hoped would be mirrored by Ottawa. 

But the budget, tabled by Finance Minister Chrystia Freeland on Tuesday, contained no such offer. Toronto Deputy Mayor Jennifer McKelvie said that contradicts a "direct commitment made to the city in the last election."

"I'm disappointed the deputy prime minister — a Toronto MP — would ignore a direct commitment the federal Liberals made during the last election to former Mayor John Tory and the City of Toronto," McKelvie said in a statement Tuesday evening.

Adrienne Vaupshas, a spokesperson for Freeland, said in an emailed statement that all Canadian cities have had a "reliable partner in the federal government since the start of the pandemic," touting the over $5 billion in emergency funding that was distributed to municipalities in 2020 and 2021. Ontario received the largest share of that money, which the federal government says was distributed equally per capita.

Vaupshas instead placed the responsibility on the provincial governments, saying "the provinces have a particular responsibility to support and work with municipalities, too." 

No new measures to combat housing crunch

McKelvie says Toronto's shortfall is largely due to decreased ridership on the TTC in 2022 and increased homelessness costs during the pandemic.

Pandemic aside, the city is grappling with issues related to rising inflation and labour shortages. In fact, a report from consulting firm Ernst & Young released last week warns Toronto will face $46.5 billion in financial pressures over the next decade that will likely threaten the city's fiscal stability and the sustainability of its service levels. 

"Without meaningful action to address and reduce the $46.5-billion pressure, the future of Toronto as a great place to live, visit, and do business could be at risk," the report reads. 

Adding to Toronto's fiscal pressure, the report says, is a housing affordability crisis. 

Cities across Ontario continue to have some of the highest housing prices in Canada — an issue that will likely continue to be a challenge as the province's population grows.

But the newly-released federal budget includes no new major commitments to help cities tackle the housing supply crunch. 

In a statement Tuesday following the release of the budget, Ontario Minister of Finance Peter Bethlenfalvy said he expects to work with the federal government to tackle the issue. 

"We continue to call on the federal government to defer the Harmonized Sales Tax on all new large-scale purpose-built rental housing projects to help spur construction of more rental housing units," he said. 

Meanwhile, experts in municipal finance and public policy have told CBC News there's a mismatch between the services cities are expected to provide and the revenues they have available to pay for them.

That mismatch was made more apparent in new figures outlined in the budget tabled last week by Premier Doug Ford's government, revealing just how flush with money the province is right now.

• As Ontario rolls in tax dollars, why are its cities so cash-strapped?

For her part, McKelvie said she will continue to "fight to make sure our city receives its fair share from the other governments." 

"Our ongoing financial challenges demonstrate that we need a new fiscal framework for Toronto. I remain committed to having those discussions with the provincial and federal governments."