Toronto needs financial support now, deputy mayor says in letter to Freeland

The deputy mayor of Toronto continued her calls for federal financial support to help the city address a nearly $1-billion hole in its 2023 budget, in a letter to Deputy Prime Minister Chrystia Freeland on Monday.

In the letter, Jennifer McKelvie urges Freeland to honour an election promise made by the Liberals to provide the city with 2022 operating funding and work with the province to address the city's 2023 COVID-19 costs. McKelvie says funding support needs to come before the mayoral byelection on June 26. 

"This is an urgent situation that cannot wait three months — the City of Toronto cannot wait and the people of Toronto cannot wait," McKelvie wrote. 

A spokesperson for Freeland previously told CBC News all Canadian cities have had a "reliable partner in the federal government since the start of the pandemic," touting the over $5 billion in emergency funding that was distributed to municipalities in 2020 and 2021. Ontario received the largest share of that money, which the federal government says was distributed equally per capita.

Still, McKelvie says the funding is needed for the city's transit system and homelessness response. 

"As you know, I have expressed my disappointment in the federal budget because it failed to include promised funding for our COVID-19 costs," McKelvie wrote to Freeland on Monday.

In its 2023 budget, the city is facing a nearly $1-billion budget shortfall created by the pandemic. On March 29, McKelvie said the city's next mayor would have to slash services without a cash injection from the province and Ottawa.

Last week, the city received $235 million from the province to address COVID-19-related operating pressures in 2022, though that was announced in late 2022 and does not decrease the $933-million shortfall in the city's 2023 budget. The 2023 federal budget tabled on March 28 included no relief for the this year's shortfall. 

Liberal government's promise

During the 2021 election, the city sent a letter to the Liberals outlining municipal priorities in the federal contest, according to a document shared with CBC News by David Turnbull, press secretary for the Office of the Mayor. 

The first item was a request for continuing COVID-19 operating budget relief. The city said it would need between $702 million and $1.534 billion in 2022 to cover ridership losses on the TTC and pressures on the city's shelter system, among other issues. 

In a letter responding to the city, the Liberals said they have done whatever it takes to get Canadians through the pandemic and said they could do more. The letter, provided to CBC News by the city, is dated Sept. 9, 2021 and signed by the prime minister. 

"Canadians and communities requiring additional support from the federal government can trust that a re-elected Liberal government will deliver that support," the letter states.

In her letter Monday, McKelvie said city council unanimously voted to urge the government to work with the province to address the city's 2023 COVID-19 costs, including transit and homelessness. 

As for the province, it says it will be reimbursing COVID-19 expenses in "due course," says Victoria Podbielski, spokesperson for Steve Clark, the provincial minister of municipal affairs and housing.

Freeland responds

Freeland was in Toronto on Monday to speak about the budget at the Toronto Region of Board and Trade, where she was asked about the city's shortfall. 

"There is no political entity in Canada that has contributed more robustly to the city of Toronto — I would probably say in its history — than our federal government," Freeland said, according to a transcript of her response provided to CBC News by her press secretary. 

With the way Canada is structured, the provinces are responsible for the municipalities, she said. Freeland said if the city feels it has shortfalls that can't be met through its tax base, people should bike, walk or drive to Queen's Park and knock on its doors.

"We're seeing a strong fiscal position in Ontario. And I think that's a good place to be seeking support if that's what the city of Toronto needs," Freeland said. 

Country moving forward, city in recovery

McKelvie says she understands the federal government is prepared to move on from the pandemic and has the revenues to do so. But that's not the case for Toronto. 

"Our city and municipalities across Canada are still in recovery mode and, as you know, dependent on property taxes and limited revenue tools," she wrote. 

The city's property tax raises have been inadequate for years, experts have previously told CBC News. Property tax revenue has risen by an average of less than three per cent annually since 2016.

In a statement last week, McKelvie said the city has raised property taxes every year, including a 5.5 per cent increase this year — the largest increase since amalgamation, McKelvie said. 

Last week, city council voted to support McKelvie's ongoing advocacy to the federal and provincial governments for a new fiscal framework and revenue tools for the city.