Toronto kicks off budget process as talks to tackle $1.5B deficit near end
Experts say Toronto residents could be in for a tax hike above inflation to address fiscal difficulties
Budget season comes early to City Hall next week.
Mayor Olivia Chow is making good on a campaign promise to put the budget together differently. Part of that means holding a round of consultations over the next week and a half, ahead of the typical budget kick-off in January.
Experts say it's no coincidence that the meetings begin a little over a week ahead of the expected conclusion of key fiscal talks with the province and federal government.
When the new mayor announced the budget meetings earlier this month, she said she didn't want to pre-judge the process though she made little attempt to hide her hope for the outcome.
"So, I need help, the budget committee needs help," she said. "We want people to tell us what services matter to them, and how much they're willing to pay for it."
Chow quickly added that part of the process is about sending a message.
"I've gone to Queen's Park, I've gone to the House of Commons in Ottawa," she said. "But we need the people to speak up, because you know what, we need a new deal in this city."
Toronto is facing a $1.5 billion budget shortfall this year and has already taken steps to close that gap by increasing some taxes and fees. But Chow is hopeful that the early budget consultations will arm her with a list of priority services people across the city deem essential.
That's a list she could then turn and present to both upper levels of government around the same time that a report from senior civil servants taking part in those fiscal talks are set to file their own recommendations aimed at addressing Toronto's structural deficit.
In essence, it's a list of priorities that will need funding or risk being cut.
Chow may need to use 'bully pulpit': Mihevc
Former city councillor Joe Mihevc said Chow convincing the other governments to come to the table to talk about the city's finances is no small feat. Now, he said, she needs to use the limited tools available to her to convince them to solve the problem.
"Cities have very little power in these conversations," Mihevc said. "Really, the most powerful tool that the mayor and council has is the bully pulpit. It's not a legal power."
Mihevc said that while Chow will have both the consultation results in hand and the recommendations from the civil servants at the table, he expects the other governments to be doing their own research.
"That will be accompanied by the feds and the province doing some polling," he said. "They're going to want to verify where the public is going."
Chow is going to try to build "political urgency" in the coming weeks through the consultations and with any potential release of the results of the fiscal discussions, said York University public policy professor Zac Spicer.
Chow will have a difficult path to navigate as affordability issues could dominate the consultations. He says it's expensive to live and work in Toronto and Chow has to balance that with the need to demonstrate that Toronto is doing its part to address its financial pressures.
"I think a win for Olivia Chow is getting the money she needs to ensure that property taxes are raised within a reasonable level and city services continue for another year," Spicer said. "But that doesn't give a lot of fiscal room to do a lot of the really ambitious things that she and others want to see."
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Chow has been coy about what a property tax increase would look like under her leadership, not wanting to commit to a number for months.
After more than decade of property tax increases lower than other GTA communities, Toronto Metropolitan University politics professor Myer Siemiatycki said he'll be watching to see if there is push back against even the suggestion of something higher.
"It's going be very interesting to see, at these upcoming budget consultations, which of the two forces are loudest," he said. "Is it 'hold the line on taxes, don't increase my taxes,' or will it be, 'we need improved services and infrastructure.'"
Consultations to culminate in February vote
Consultations start Monday and run until Nov. 29. Chow will present her draft budget in January and then another round of consultations will start. All of that work will culminate in council passing a spending package in February.
What that property tax increase looks like in February will depend greatly on what comes out of the talks with the province and federal government, Siemiatycki said.
Toronto has pitched the creation of a municipal sales tax to help provide long-term funding. But the province has seemed cool to the idea, instead reportedly opening the door to uploading the Gardiner Expressway and Don Valley Parkway.
But if the mayor wants the province and federal government to kick in more cash, the city will have to as well, Siemiatykci said — and that could mean a tax increase above the rate of inflation.
"They're going want to see the City of Toronto taking some pain on this," he said.
Mihevc said Chow is still in her honeymoon phase after the election, so she may have no choice but to use some of that political capital with city residents to get a deal done with the other governments.
He says there's no better time to do that than early in a term of office.
"It'll be a combination of cost containment she will have to undertake and then also she'll be saying, 'Okay, I will eat an above inflation tax increase, and I'll take it to the public," Mihevc said.
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