TORONTO – Mayor John Tory is proposing Toronto borrow from its own reserves to cover an $86 million void in the city’s budget created by withdrawn provincial funding.
Tory is proposing the city borrow $60 million from the reserves and pay it back, with interest, over four years.
“This proposal is designed to have no impact on service levels,” Tory said. “This is the beginning of a process where we will be scouring the city for real savings and efficiencies.”
Tory said $25 million in efficiencies would also be used to help fill the gap. A few of those efficiencies include cutting the budget for vacant jobs, reducing the budget for social services, reflecting the new, lower cost of fuel, and asking the TTC and police to find $5 million in savings each.
The plan also involves temporarily reducing capital contributions from the operating budget by $130 million over four years. The money cover the funding gap left after provincial funds to pay for affordable housing were discontinued in 2013. Last year’s gap was offset due to the province forgiving a loan to the city.
But the number will grow over the next four years as the province pays less and less towards affordable housing.
“The problem is that if you don’t close the gap this year, the gap still exists this year,” Councillor Gord Perks told reporters Thursday. “So every year that we don’t act, the total amount of money we need to borrow grows.”
Perks suggested the city hike property taxes a further 3 per cent instead of borrowing the money.
“The mayor is gambling that he’s going to be able find magic efficiencies that he didn’t find yet, and if we don’t find them, the property tax impact is twice as big than if we acted today,” Perks said.
But some councillors don’t see it that way. Councillor Shelley Carroll agrees with Tory’s idea, calling it “realistic” but said the city needs to be willing to increase taxes to pay for essential services like affordable housing.
“So the province saying, ‘I’m adding something to the property tax bill that didn’t use to be there’ at this particular point in time, is a real pressure. And so I’m going to support the mayor’s program to spread out that new reality,” she said. “We must build it in every year. It’s not fully there in cuts. People need their services.”
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