Tax hikes, service cuts expected in Toronto budget

Service cuts and hikes in property taxes and user fees are likely in the cards as Toronto tries to bridge a budget shortfall estimated in the hundreds of millions of dollars.

Toronto will unveil its operating budget for the coming year Tuesday morning, and all indications are it's going to be tough for the city to balance its books.

By law, municipalities are not allowed to run deficits, but Toronto is faced with a shortfall that the Toronto Board of Trade pegs at $382 million this year. 

The chair of the budget committee, Coun. Shelley Carroll, told CBC News property tax hikes are all but inevitable if the city wants to address the budget gap. She said she would like to limit an increase to four per cent, the same as last year's hike.

"It's going to have to be a pretty adult conversation in order to balance the books and keep that property tax at a level that folks can continue to afford and stay in their homes," Carroll told CBC News.

David Soknacki, Carroll's predecessor as budget chief, said in an interview with CBC News that the property tax question is causing tension at City Hall. 

With a municipal election looming in October, councillors shudder at any significant increases, but city bureaucrats are unfazed by the prospect of a hike, he said.

"If you go inside of the finance department [there's] a belief that property taxes in the city of Toronto are low — low by standards of the 905 and low by Ontario standards."

'Some job losses'

Carroll also said some city services will be cut and people will pay more for others.

"We've protected as many services as we can," said Carroll. "But there are some job losses, and there are some changes in user fees."

Soknacki said that while increasing user fees can bump up revenues, cutting labour costs should be considered as they yield substantial savings.

"It's entirely within the city's jurisdiction to take a look, for instance, at things like furlough days or days without pay," he said. "It would be greatly unpopular but they might be some of the things you've got to take a look at."

So far, calls for belt-tightening have been largely ignored by politicians who are loath to slash budgets in an election year.

Carroll has asked all the city's departments to look at cutting their budgets by at least five per cent this year.

Both the TTC and the Toronto Police Service, which together account for more than $2.1 billion of the city's $8.7 billion operating budget, have asked for more money instead of less.

The Toronto Police Service has requested $896 million in funding this year, up from $854 million in 2009. Meanwhile, the TTC is looking for a seven per cent boost to its $1.3-billion operating budget.

Provincial bailout?

But the wild card in the budget game is how much money the provincial government will provide to offset Toronto's budget shortfall, Soknacki said.

Last year, the province offered the city $238 million in a transfer that was labelled as a one-time payment for transit funding, but was applied to the budget shortfall.

There is no indication the province will be in as giving a mood this year as it is confronted with a $24.7-billion deficit of its own.

This year, the province and the city have are having ongoing discussions about that money. Nevertheless, the city often doesn't know how much money is coming from the province until budget day, Soknacki said.

"The dance goes beyond the 11th hour," he said, adding the province sometimes makes a decision only after a draft of the budget is written.

The city will hold public hearings in March before council votes on the operating budget in mid-April.