Toronto can't cut or tax its way out of provincial cuts — and so the fight is on

After weeks of back and forth, the bean counters at Toronto city hall have finally been able to attach a number to the municipal funding cuts resulting from the provincial budget. The damage? Nearly $178 million — and counting.

Toronto's got 178 million problems and Premier Doug Ford is all of them.

The total, crunched by Toronto City Manager Chris Murray and sent to Mayor John Tory and councillors in a memo, includes a whole range of cutbacks.

Those cuts include:

• Cuts to public health and child care programs stemming from changes to cost-sharing.
• A cancelled cost-of-living increase for Toronto paramedics.
• A decision not to increase the city's share of the provincial gas tax.

The budget knife didn't stop there. Those are just the cuts confirmed so far that create immediate problems for Toronto's 2019 budget.

The Ford government claims there's a simple solution: Toronto just needs to find ways to make its spending more efficient. But the timing of the cuts and the reality of city finances make that a tall order.

Consultants, bureaucrats, past mayors have struggled to find city hall waste

In a statement last week, Ford didn't mince words about his view on Toronto's fiscal situation: "Instead of looking out for the taxpayer, the City of Toronto has let waste fester."

But a close look at Toronto's finances makes it hard to imagine where the city could be hiding anything close to $178 million in festering waste.

While recent reports by the city's auditor general have uncovered problems in areas like the city's tree maintenance program, the amount of savings achievable — estimated at about $2.6 million a year for tree maintenance — are a small fraction of the $178 million the city needs to find.

And the city is more likely to use any found efficiencies to prune more of the 10.2 million trees in Toronto each year, rather than plug budget holes.

Figures from the city's 2019 budget, passed by the mayor and council in March, reveal why so many have struggled to find big ticket savings. And yes, that includes the late Mayor Rob Ford, who was forced to raise property taxes to kickstart the Scarborough subway project.

Adjusted for inflation, the amount the city spends per Toronto resident has steadily decreased over the last decade, from $4,598 in 2010 to $4,393 this year. That includes a per-capita reduction in the amount the city spends on health and social services.The math suggests the efficiencies Ford is demanding have already been found.

Property tax hike to fill provincial funding void would be steep

While Toronto's residential property taxes are low compared to other GTA municipalities, the tax hit required to plug a $178 million hole would be massive.

It would require an annual residential increase of around six per cent. Throw that on top of the typical increase needed to cover inflation and the average Toronto taxpayer could be facing a nine per cent increase — an amount that would work out to more than $250 for the average household.

But even if that sounds palatable, the budget and tax rates for 2019 have already been approved. Final tax bills are scheduled to be mailed out this month.

The province is effectively asking Toronto council to redo its budget process midway through a budget year — an unprecedented request.

Without alternatives, fighting back looks like Toronto's best option

Given the timing and lack of other options, Tory and council have settled on a simple strategy: fighting. Over the last week, the city and province have engaged in an escalating war of words, with Tory now promising to go "ward-by-ward and door-to-door" to fight these cuts.

The hope is that public pressure from Tory — who recently secured the support of more than 60 per cent of voters — will cause Ford's government to reverse or at least soften their plans.

There's a lot at stake. Ford has cited deficit reduction as the primary driver behind these municipal cuts, but this year's provincial budget still leaves a deficit of more than $10 billion. If municipal cuts are established as a successful route to deficit reduction, Toronto seems bound to face the knife again.