Council approves 2021 budget, maintaining status quo despite major shortfall due to COVID-19

Toronto city council on Thursday crossed the fiscal finish line after a budget process that has been repeatedly described as the most difficult in the city's history.

The now-approved 2021 budget will keep most city services at existing levels and pegs property taxes to the rate of inflation — despite an expected shortfall of $1.6 billion caused by the COVID-19 pandemic.

"This is a responsible budget that does the right thing during these very tough times," said Toronto Mayor John Tory during a Thursday morning news conference. 

"The city has never before been faced with a crisis which affected our finances in this way."

Toronto expects that its pandemic-fueled shortfall will be made up by a combination of emergency funding from higher levels of government along with savings and efficiencies identified by the city.

However, only $740 million in emergency funding for 2021 has been confirmed, leaving the city with a $649 million hole in its 2021 budget directly related to the pandemic.

Tory said he is working "non-stop" to lobby the provincial and federal governments for additional money to cover that gap, though nothing has been confirmed yet.

He said another round of funding is needed if the city is to maintain the service levels and property tax rates called for in the budget.

"I think it's important for us to recognize that the budget is not balanced," said Coun. Kristyn Wong-Tam, who represents Ward 13, Toronto Centr, during Thursday's council meeting.

"It's based on hopeful assumptions."

Toronto's 2021 operating budget, which funds day-to-day services such as transit, police and parks, is $13.98 billion. The 10-year capital budget, which funds infrastructure projects, is $44.7 billion.

The city experienced a $1.7-billion shortfall in 2020, which was entirely covered by the federal and provincial government's Safe Restart Agreement, in addition to savings found by the city.

Property taxes, service levels to remain at status quo

Residential property taxes in Toronto will increase by 0.7 per cent this year and Toronto's city building fund, which collects money for major infrastructure projects, will also increase by 1.5 per cent.

The two tax increases amount to an additional $69 annually for the owner of an average home, assessed at just under $700,000.

The budget also commits to maintaining normal funding and service levels on the Toronto Transit Commission, despite a massive loss of ridership and fare revenue during the pandemic.

Funding for the Toronto Police service will also hold steady at $1.076 billion, an identical figure to the force's allotment in the 2020 budget.

Some councillors, mainly representing wards near downtown, criticized the budget for a lack of bold planning and investment. They expressed concern that the plan will not position the city to recover from the pandemic nor prepare it for future crises, such as climate change.

"We're letting a principle of keeping property taxes low guide our investments in this budget, when we've been clearly indicated by the public that they'd like to see greater investments," said Coun. Mike Layton, who represents Ward 11, University-Rosedale.

The budget reduces funding for the city department leading climate change work. It also maintains the $2-billion commitment to repair and transform the eastern portion of the Gardiner Expressway.

Budget chair Gary Crawford said the budget successfully accomplishes three primary objectives: preserving service levels, keeping infrastructure projects on track and keeping property taxes affordable.

Council approves several new projects and policies

The 2021 budget also set in motion the process of creating a vacant home tax, which could be implemented at an undetermined future date.

Councillors also approved several amendments to the budget that will carry a range of financial implications.

Taxi and limousine operators will see a temporary 50 per cent reduction in their licensing renewal fees after a successful amendment designed to relieve stress on those businesses.

City staff will also begin a report exploring the creation of a first-response service that would provide "support" in select situations, including instances of domestic or gender-based violence and substance abuse.

Mayor John Tory also introduced a successful amendment calling for the city to "reiterate its commitment to taking all measures needed to provide emergency housing, shelter or respite."

The motion also asks the provincial government to provide funding for 1,098 new supportive housing units in 2021.