Toronto Mayor Olivia Chow accused the federal government of finger pointing on Monday, as Canada’s deputy prime minister placed the responsibility to help the city with its pandemic-ravaged finances on the province’s shoulders.
A two-page letter from Deputy Prime Minister Chrystia Freeland to Chow in response to Toronto’s request for additional help offered no new promise of federal funding on Monday. Freeland indicated the city could dip into its own savings or look to the province.
Freeland, who is also the federal finance minister, said the Ontario government has the constitutional responsibility and fiscal capacity to support Toronto.
“It is our firm expectation that they will do so,” she wrote to Chow.
Chow wrote in a statement Monday that the province had signalled its willingness to partner with the city.
“I remain hopeful that the federal government will join us as well, despite today’s finger-pointing,” she said.
The letter is the latest development in an ongoing saga between the different levels of government over how to tackle Toronto’s pandemic-related budget shortfall.
Chow inherited a nearly $1-billion budget shortfall, in large part tied to decreased transit revenues and increased shelter costs.
Staff reports indicate Toronto could plug the hole in this year’s budget by draining most of its remaining COVID-19 backstop fund, drawn in part from an already stretched capital budget.
But how the city will pay for up to an estimated $927-million budget shortfall next year remains an open question.
The mayor is expected to convene a special meeting of the executive committee next month to tackle the city’s long-term financial plan.
Freeland’s letter says the federal government’s ability to provide support had limits. She credited Ontario’s “excellent fiscal position” to the federal government’s emergency pandemic support.
“Mayor Chow, our government has been — and will continue to be — a committed partner for the City of Toronto,” Freeland wrote in the letter.
“However, the ability of our federal government is not infinite — and the emergency support we provided during the pandemic led directly to the excellent fiscal position that the Province of Ontario currently enjoys.”
The Financial Accountability Office of Ontario has projected a provincial budget surplus of $10.6 billion by the 2025-2026 fiscal year, more than the government-forecasted $4.4-billion surplus.
In response to the letter, Premier Doug Ford’s office deflected back to the federal government. A statement from a spokesperson in his office did not mention new support for Toronto’s budget shortfall, saying the city’s request for additional funding was directed at the federal government.
“We hope the federal government and Toronto can work together to find a solution,” the statement read.
Freeland, meanwhile, wrote Toronto’s $11.2-billion reserve fund had an estimated $1.6 billion in uncommitted “stabilization” funds available, money set aside for emergencies and unanticipated costs.
But recent city reports have put that number far lower, indicating all but $290 million of the reserve funds were fully committed to support the city’s 10-year operations and capital plans.
Chow officially took office earlier this month, coming off a byelection campaign where she pledged to work with other major cities to get a new fiscal deal for municipalities.
Officials have long said Canada’s most populous city deserves unique financial consideration given the outsized role it plays in regional services from transit to shelter and housing supports.
Chow welcomed the federal government’s commitment last week to provide $97 million to help shelter asylum claimants in Toronto, but said it was not enough to meet the city’s needs given an increase in claimants and with the shelter system operating at capacity.
She teamed up with Ford and issued a call for the federal government to add another $26.7 million to the program offering rental housing stipends.
The mayor has indicated the new federal dollars would be used to help open up around 250 shelter spaces for asylum claimants in Toronto.
“Recently, when we worked together sheltering refugees, we saw some immediate short-term successes. That is the kind of continued partnership we need to deliver affordable housing, fast and reliable transit and good public services for the people of Toronto for years to come,” Chow said.
Freeland’s letter noted last week’s announcement and said the federal government had committed $1.86 billion to the city this fiscal year through various programs, such as funding for public transit, infrastructure and addictions programs, with that number projected to rise next year to $2.3 billion.
— With files from Nojoud Al Mallees