Toronto city staff propose 10.5% property tax hike as part of 2024 budget
Tax increase could be high as 16.5% if Ottawa doesn't provide more shelter funding, city warns
Toronto staff are recommending a nine per cent hike to the city's residential property tax — the largest single-year increase since amalgamation in 1998 — as they look to fill a nearly $1.8 billion budget shortfall in 2024 and a grim long-term fiscal outlook.
With the recommendation of an additional 1.5 per cent increase to the city building tax, property owners could see their tax bill jump 10.5 per cent this year if the figures go unchanged during five weeks of scheduled budget debates and consultations. The city building tax is a special levy introduced in 2016 that goes toward major transit and housing projects.
The potential increases were outlined by budget chief Coun. Shelley Carroll at a Wednesday morning news conference ahead of staff presenting their fiscal plan to the city's budget committee.
"It is no secret that this is going to be a challenging financial year," Carroll told reporters, adding that higher property tax bills are necessary to maintain important city services.
According to city staff, the property tax increase would cost the average household another $26.75 per month, or about $321 annually, and generate $380 million in additional revenue this year. Meanwhile, the city building levy would cost another $4.42 monthly, or about $53 per year.
"I feel strongly that we cannot keep kicking that can down the road. We need to get our city back on track," Carroll said.
In her remarks, Carroll also cautioned that if the federal government does not come forward with $250 million in funding for refugee claimants in Toronto's shelter system, the city will "have no choice" but to impose a six per cent "Federal Impacts Levy," raising the total residential tax increase to 16.5 per cent.
Carroll said that a federal funding commitment would need to come by Jan. 26 to make it into this year's budget. Toronto Mayor Olivia Chow has been calling on Ottawa for months to provide more money for refugee claimants, who currently account for nearly half of the city's shelter residents — a figure that has rapidly expanded since the start of the COVID-19 pandemic.
"I am optimistic, however, that the federal government will do something," Chow said on Wednesday afternoon.
A statement from a federal Ministry of Finance spokesperson did not directly address the specific request. However a federal source told CBC Toronto that Ottawa is working to find additional financial support for the city.
In an interview Thursday morning with CBC Radio's Metro Morning, Minister of Immigration, Refugees and Citizenship Marc Miller said his staff have been at the table with the city discussing further federal support.
"I think I can see something positive coming on the horizon. I can't guarantee the numbers that the mayor has put out but it's certainly something that we're willing to work with [the city] on in a productive way in the next couple of months," he said.
Miller said that cost figures provided to his ministry in private are at times different than those that "fly about publicly.
"But we are certainly willing to meet them at a point that makes sense and it's a question of sitting down and doing the hard work and looking at the numbers and what they're for," he said.
Asked about Shelley's warning of a "Federal Impacts Levy," Miller said responsibility for any municipal tax increase would fall squarely with Chow and her administration.
"Any time a city imposes a tax, you can call it whatever you want, but it's still a city tax, it's not a federal tax. The decision-making process is for the mayor and her office to assume," he said.
Figures could change in coming weeks
Toronto, like all Ontario municipalities, is required by law to balance its budget. But despite the financial impact on residents, the potential tax hikes for 2024 aren't enough to close the gap on the city's books. If Toronto wanted to fully address this year's opening pressure of almost $1.8 billion through taxes alone, it would need to increase property taxes by a whopping 42 per cent, according to budget documents.
The proposed hikes for this fiscal year come after more than a decade of mayors and council keeping property tax increases at, or around, the rate of inflation, even in the face of successive warnings from high level staff that demand for services in the growing city would eventually far outpace what could be funded through the existing tax base.
The details of the proposed increases for 2024 could change in the coming weeks as city councillors debate the $17-billion budget. Under provincial strong mayor powers, Chow will also present her own budget proposal on Feb. 1. Council is set to vote on a final fiscal plan on Feb. 14.
Chow said she's looking forward to this "first step of the process" in fixing the city's financial mess and building a city that's more "affordable, caring and safer."
"I will be listening very closely to Torontonians about what matters to them," she said.
Some residents, however, remain unconvinced.
Avi Bodenstein, a Toronto homeowner for the past 10 years, said the increase in taxes will hurt residents and she is skeptical the extra money will be spent "properly."
"It's a struggle these days to make a living," Bodenstein said. "Whether you rent or own, it's a struggle, and politicians, bureaucrats need to be aware of it."
$600M in spending cuts
Carroll noted the staff-prepared budget includes $600 million in cost savings and efficiencies, while maintaining "core services." One service that would be eliminated is the city's windrow clearing program, which uses specialized plows to clear the ends of driveways in some parts of the city during major snow storms. Staff said the program would be eliminated next winter and save the city some $16 million annually.
There is also $152 million in new investments proposed that include:
- $82 million for shelter and housing, including the revised winter warming response plan.
- $30 million for transit service, including hiring more TTC special constables.
- $20 million for community services, such as keeping some libraries open longer on weekends.
- $19 million for public safety, including the city-wide expansion of the crisis service and the council-endorsed hiring plan for fire and paramedic services.
Meanwhile, the so-called new deal the city made with Premier Doug Ford's government late last year includes $382 million in provincial operating funding for this fiscal year. That agreement will also see Ontario upload the Gardiner Expressway and Don Valley Parkway and relieve $3 billion in capital pressure from the city over the next decade.
Toronto's strained finances take centre stage during every annual budget debate. But the problem has become more pronounced since the pandemic as the city took on hundreds of millions in unexpected costs. TTC fare revenue plummeted and the number of unhoused people seeking space in Toronto's shelter system spiked.
According to city staff, the proposed budget shifts $578 million in sustained financial impacts from the pandemic on to Toronto's tax base, as relief funds from other levels of government have stopped flowing.
The proposed budget also lays out a $49.8 billion 10-year capital plan. Of that money, it's estimated that 52 per cent, or $26 billion, will go toward state of good repair projects. The state of good repair backlog sits at about $10.6 billion, and is expected to balloon to $22.7 billion by 2033.
Torontonians will have a chance to weigh in during the budget process. The city is hosting telephone town halls on Jan. 16, 17 and 18. The public can also speak directly to the budget committee on Jan. 22 and 23, or leave a written submission. Residents are also being encouraged to contact their city councillors with any concerns or feedback.
ABOUT THE AUTHOR
With files from Vanessa Balintec