Toronto Mayor Olivia Chow held an unorthodox public consultation about her proposed city budget Thursday, inviting city residents to a phone-in town hall.
Thousands called in. The mayor’s team started with a poll asking residents: What should the city prioritize in its spending? Affordable housing and shelter led with 42 per cent, followed by policing at 26 per cent and transit at 18 per cent. Fourteen percent had another priority.
Callers were then asked what the city should cut. Twenty-nine per cent of respondents picked initiatives related to climate change and the environment, followed by policing at 28 per cent and support for small businesses at 23 per cent. Twenty per cent said other.
The mayor has proposed a $17 billion budget with $1.776 billion in unfunded spending. One of the proposed actions to balance the budget — which all Ontario cities are required to do — is a property tax increase of nine per cent, the largest such increase in Toronto since 1998.
An additional 1.5 per cent increase to the city building fund is proposed, which goes to transit and housing projects, making the preliminary property tax hike 10.5 per cent.
An additional six per cent property tax increase is proposed, unless the federal government provides Toronto with $250 million for 4,300 new shelter beds for refugee claimants and asylum seekers.
The first question to Chow on Thursday came from Ellen, a senior from Toronto.
“With the current [proposed property tax increase] at 10.5 per cent, a senior living alone like myself could lose my house and end up on the street, which would further exacerbate your [homelessness] problem. What do you say to that?”
Chow said that was the last thing she wanted to have happen and told Ellen about programs for seniors that can defer property taxes.
The proposed tax increase has alarmed residents who say now is the worst time for higher bills given the cost of living crisis. But experts say the increase was inevitable, as the city lacks alternative revenue sources to fund basic services and new spending.
“Mayor Chow’s proposed property tax hike is a major political gamble,” said Matthew Olsen, an associate at Jenni Byrne + Associates, a government relations firm.
“In fairness to her, Toronto needs to increase the revenue it takes in… [But the] policy won’t win over the city’s homeowners — a major municipal voting bloc — and renters, who will surely be subject to downloaded rent and cost increases in light of the hike,” Olsen said.
‘Very upset’
The proposed budget includes $152 million in “new and enhanced initiatives,” such as $82 million toward shelter and housing to fund the city’s winter warming response plan and shelter services.
These investments are drawing considerably less attention than the tax increases proposed to pay for them.
“The vast, vast majority of people are very upset with the city government, in particular over the magnitude of the raise in property taxes,” said Stephen Holyday, city councillor for Etobicoke-Centre, a day before the town hall.
An increase of nine per cent in property taxes would cost the average taxpayer $321 a year, according to the budget.
TTC Riders, a transit advocacy organization, says raising property taxes is a fair way to balance the city budget.
“Past city council decisions shielded homeowners from bigger property tax increases by squeezing transit service and raising fares. As a result, TTC fares have risen faster than the rate of inflation for decades,” said TTC Riders in a document submitted to council.
The property tax increase is expected to raise $380 million in government revenue, according to the budget.
To get closer to a balanced budget, the mayor has proposed deferring $388 million in previously approved spending to future years, something Chow referred to as “multi-year bridging strategies.”
Dianne Saxe, city councillor for University-Rosedale, hosted her own town hall Thursday at the same time as the mayor’s.
First to speak was Sarah Delia, who said the budget was “appalling” on many levels, including the increased support proposed for asylum seekers and refugees.
Since summer 2023, thousands of asylum seekers have been showing up at airports across the country, including Toronto’s Pearson International. City governments, faith groups and NGOs have been struggling to support them and say more help is needed from the federal government.
“It’s irresponsible to think that we can take care of all these migrants and refugees. We’re giving them a false sense of hope here,” Delia said.
Saxe says the city has no control over the flood of refugees and asylum claimants coming into the city, but most residents still want the city to pay for their care. On May 31, 2023, acting mayor Jennifer McKelvie said Toronto shelters would no longer accept asylum seekers as funds were running out. That led to thousands of asylum seekers sleeping outside Toronto’s shelters.
“The reaction from the public was revulsion and demand that we do something about it… the alternative is to leave them on the street,” Saxe said. “We have asked the federal government to do something about this… it seems to have completely abandoned any kind of border control.”
Saxe heard a diverse group of viewpoints. Samantha was worried about cuts to the police budget. “This is not going to be fixed by increased numbers of paramedics or increased numbers of firefighters. We actually need more police officers.”
Toronto police requested $1.186 billion in 2024, but the proposed budget allocates $1.174 — a $12 million or one per cent difference.
Francis May said we need to cut police funding. “I think there’s a lot of things that the police have been tasked with that they should not be doing, and there are resources which could be spent elsewhere.”
New tools needed
On November 27, Ontario and Toronto agreed on a new deal for the city which will have the province provide $1.2 billion to Toronto’s operating budget over the next three years and billions more in capital funding down the line. The proposed budget states $382 million of this new funding will be used to balance this year’s budget.
During Chow’s town hall, Alan from Downsview asked, “If Toronto is the so-called economic engine of the country, why is Toronto always broke? Why is Toronto constantly whining and begging Queen’s Park and Ottawa for more money?”
Chow said Toronto is Canada’s economic engine, but city government doesn’t receive most of its tax revenue.
“Of all the tax revenue generated in the city, only nine per cent goes to the municipal government,” the mayor said.
Meanwhile, 44 per cent goes to the province and 47 per cent goes to Ottawa, according to the budget.
With a year over year increase of $884 million, the city hasn’t actually found any savings, says Franco Terrazzano, federal director of the Canadian Taxpayers Organization.
“They’re not saving money. They’re just spending less than they would hypothetically like to.”
The reality is Toronto’s budget has a large deficit. And property taxes are one of the only tools cities have to raise revenue, says Neil Saravanamuttoo, director at CitySHAPES, a non-profit committed to building better cities.
“What’s happening in Toronto is a result of decades of policy property taxes [that] have been kept quite low. There hasn’t been the growth required to keep up with inflation or the desire to provide more services,” he said.
The city needs new tools to raise money, Saravanamuttoo said. Among options are a municipal sales tax or a traffic congestion tax, the latter of which former mayor John Tory proposed when he was in office.
Disclaimer: Matthew Olsen is a friend of Fin DePencier.
Great article. In my opinion it informs readers on the need for increased property taxes. At the same time, it brings home the need for control of the refugee influx by the federal government. Reading the article, I am left with the view that Toronto government is heading in the right direction and the federal government is continuing to do a very poor job.
If the police and transit services were run by private profit seeking entities, they would take steps to reduce their main costs, i.e. wages and the workers would respond with proposals for increased productivity, flexibility over non-monetary issues and perhaps temporary wage freezes or cuts. There are lots of good reasons for the police services to be provided by the City and for profit transit elsewhere doesn’t seem to have worked out well. We need some non-ideological policy work on how to secure the benefits of collective bargaining in the private sector in the context of the public sector.