Toronto braces for potentially large tax increase as budget deliberations loom

Homeowners in Toronto are bracing for a potentially big property tax increase as city hall struggles to fill holes in its annual financial plan.

Toronto council is embarking on its first budget under Mayor Olivia Chow, with a series of high costs still to be addressed.

Chow recently secured a historic new deal with the Ontario government, including funding to run two transit lines and to take control of the Gardiner Expressway and Don Valley Parkway.

Despite the relief from Queen’s Park and some funding for housing and homelessness, Toronto’s city manager Paul Johnson said the city is still facing a $1.8 billion shortfall.

“Budget time is tough,” he said at city hall on Monday. “We knew going into 2024 this was going to be an incredibly challenging budget year.”

While the deal with Toronto “helped,” Johnson said there are still “holes” that need to be covered by increases to local property tax.

The question of exactly how much of a tax increase Torontonians are facing will remain under wraps until Wednesday, he said.

Johnson said his team would unveil its budget then but admitted it was an “incredibly challenging time” for the city.

The city’s budget chief, Coun. Shelley Carroll, said the budget still needed help from the federal government and that the tax increase would be “substantial” when it is unveiled Wednesday.

“I’m trying to be honest, but I don’t want to pre-empt the staff who are going to present their budget,” she said, refusing to be drawn on the potential tax increase.

Carroll also said pre-budget consultations would play an important part in creating the new budget.

She said by using the word “substantial” to talk about the potential tax increase, she was “getting people ready” without preempting the official announcement.

Coun. Brad Bradford, who ran against Chow in 2023’s mayoral byelection, said the prospect of a hefty tax increase was “concerning” to him.

“Everybody knows we’re in an affordability crisis here in the city of Toronto,” he said, adding he had no “line of sight” into exactly what Chow’s budget would look like.

Bradford did not give a number for his preferred property tax increase but said it is important it “reflects” the rate of inflation.

Council will begin its work on the budget on Wednesday, after consultations that ran through the end of 2023. The budget committee is set to meet through January and there are plans to finalize the process by Feb. 14.