Suddenly, Doug Ford admits Toronto's finances aren't sustainable
New tax is off the table, but province taking on greater share of city’s costs is very much in play
While the news that Premier Doug Ford and Toronto Mayor Olivia Chow are creating a working group to tackle the city's financial problems may not sound all that startling, it actually marks a seismic shift for the man in charge at Queen's Park.
For the last 14 years, since Ford ran for Toronto city council and his brother Rob became mayor, he has persistently hammered away at one message about Toronto's finances: city hall wastes taxpayer money.
After becoming premier in 2018, Ford kept at the same theme whenever Toronto's budget woes came up, repeatedly insisting that there were efficiencies to be had at Toronto City Hall.
But on Monday, during a 40-minute news conference that was totally focused on Toronto's finances, the words "efficiencies" and "waste" never crossed his lips.
Instead, Ford talked about Toronto's need for "sustainable funding" and announced a plan to work with the city to fix its $1.5 billion budget hole.
"Toronto is facing deep financial challenges that are no longer sustainable," he said. "We need governments to work together to deliver solutions that protect services, avoid new taxes, and put the city on a path towards long term financial stability."
WATCH | Ford's agreement to address Toronto's financial problems described as 'seismic shift':
Ford's marked change in tone opens the door to negotiations about the province taking on a greater share of the city's costs, what the government's news release calls "A New Deal For Toronto."
Those negotiations will happen within the working group, made up of officials from provincial ministries and city departments, with the feds invited to join. Its deadline for delivering a deal is the end of November, in time for the city's next budget cycle.
'Avoid new taxes'
What's not up for discussion: the city's request for a new sales tax. "Any agreement established by the new-deal working group must … avoid new taxes and fees on hard-working residents of the city," said the news release.
What also appears to be dead in the water: the city getting a share of the province's take from the HST.
Ford seemed to contradict himself on this during the news conference. Asked by the Toronto Star if he would be open to giving the city a slice of the existing HST, he replied, "Not right now."
When CBC News followed up to ask Chow for her reaction to that, Ford jumped in and said, "I didn't say existing tax."
Asked to clarify Ford's stance, a senior official in the premier's office threw cold water on the idea of giving Toronto a share of HST, saying it would prompt every municipality in the province to demand the same.
The official said the primary focus of the talks will be on the province sharing a greater portion of the city's costs.
There is plenty of room for provincial help on that front, according to the mayor.
"The City of Toronto is carrying over $1.1 billion worth of services on behalf of the provincial and the federal government," said Chow during the news conference.
"That's one of the key reasons why we are in a deficit position," she said.
Chow listed off housing, transit, welfare, highways, child care, and policing as areas where the province and feds could shoulder a bigger share of the cost burden.
"What we've seen in the last 20 years is that more and more costs are being loaded on to the city's property taxes. That's why structurally it's not sustainable," she said.
Figuring out how to "rebalance" the share of costs covered by each level of government will be at the core of what the working group does, said Chow.
Province sitting on surplus
There's strong evidence that the province can afford to chip in for some of those costs.
Despite originally tabling a budget that projected a $33 billion deficit, the government ended up with a surplus of $2.1 billion for the 2021-22 fiscal year.
Within the next week, we'll learn the bottom line for the fiscal year that ended in March. The government is still projecting a deficit, while the province's Financial Accountability Officer expects a surplus, and successive surpluses in years to follow totalling more than $22 billion, unless it starts spending more on services or debt.
"I know Premier Ford has a wonderful surplus that makes me jealous," quipped Chow on Monday. "Wherever he can find the funding, I welcome it."
Coming on the heels of weeks of controversy over how the government boosted the value of land owned by select developers by removing it from the Greenbelt, the timing of Monday's announcement is good for Ford, says Lydia Miljan, a political science professor at the University of Windsor.
"He's had a pretty rough summer," said Miljan in an interview with CBC News. "So obviously he wants to change the channel, and I think by delivering some positive news to Toronto, that's really going to help his political fortunes."
Ford's shift follows Chow's election win
Toronto certainly plays a significant role in Ford's political fortunes. His Ontario PC Party won 12 of the city's 25 seats in last year's provincial election. Those MPPs (including Ford himself) could expect to hear it from their constituents if the province simply left Toronto to flounder financially and forced city hall to slash services.
We'll never know if this change in tone from the Ford government would have happened if John Tory had stayed on as mayor, or if someone other than Chow had won the election that followed Tory's resignation.
WATCH | Ford and Chow had their first official meeting. Here's what they said about adding taxes:
What we do know is that Toronto's financial situation has been fragile for years, and got markedly worse in the wake of the COVID-19 pandemic. Yet as recently as the spring the government was not ready to discuss a fundamental shift in municipal financing.
Now that discussion is on, less than three months after Ford said it would be "an unmitigated disaster" if Chow became mayor (and less than three months since the voters of Toronto elected her anyway). The language from Ford and the province has shifted dramatically.
"The financial pressures on Toronto are unique, decades in the making and growing," said the government's news release. "They have resulted in structural challenges that, absent wholesale intervention, risk the long-term viability of the city and the services it provides."
Or as Ford put it Monday, in a line that he did not read from the Teleprompter, "We understand the situation the city of Toronto is in and we will be there to support them every step of the way, to have sustainable funding."
with files from Lorenda Reddekopp