Members of the Policy and Finance Committee and the Budget Advisory Committee: what we have before us is the first draft of our 2003 budget.

Once again, it's a work in progress; to be finished by you in the months ahead.

I would like to thank our Budget Chief, Councillor David Shiner, our CAO, Shirley Hoy, our CFO and Treasurer, Joe Pennachetti, our Commissioners and our Budget Committee for all of their hard work.

I would also like to thank Councillors - in advance - for their participation in this process.

As we work towards the completion of our third and possibly our most difficult budget of the term, I believe we can find solace in a few of the accomplishments of the past five years.

Our city is a dramatically different place than it was in 1998.

Development is taking place at an unprecedented level; our waterfront revitalization is underway, our cultural institutions are about to undergo a major transformation and we have a new subway line.

We have approved an official plan to guide us through the next quarter-century; we have established an Auditor General's Office, a Housing Board and a Waste Diversion Task Force.

Our inspectors have made sure that more than 15,000 restaurants meet our standards, we are about to eliminate smoking in all public places and we have reformed our taxi industry.

For the first time, Toronto's credit rating has been upgraded. We have more police officers, more firefighters in our fire halls, more garbage bins on our street corners and more services available to our citizens.

Crime is down, employment is up and the cumulative cost of property tax increases over the past six years is below the rate of inflation.

Achieving any one of these things post-amalgamation would be remarkable; achieving them all in five short years is nothing short of incredible.

Our critics suggest that we should be more like our counterparts south of the border.

Well let me tell you what's happening in New York right now.

Unsustainable spending combined with a stagnant economy and the aftershocks of 9/11 have left the Big Apple in dire straights.

Mayor Bloomberg is calling for a 18.5 per cent property tax increase and $855 million in service cuts - this year alone.

They're laying off police officers and firefighters; closing daycares and seniors centres.

In California, they're considering $5 billion in spending cuts. In Oklahoma, state agencies have been ordered to cut their budgets by 6.5 per cent.

Toronto is doing better than holding its own. Two years ago, we passed a 5 per cent tax increase on single family homes. Last year, it was 4.3 per cent - and if we keep up the pressure, this year's tax increase will be equal to inflation: 3 per cent or less - again only on single family homes.

We are headed in the right direction - but it is not going to be easy to reach 3 per cent this year.

There are reasons to be optimistic; our partners in Queen's Park and Ottawa have started listening to our calls for help.

The province has pledged $1.1 billion for transit over the next decade; the federal government weighed in with $76 million in assistance and talks are underway for more.

The assistance pledged to date is welcome - but it isn't going to be enough.

We've got a slew of costs to deal with this year - some expected, some not.

The pressure on our 2003 budget is incredibly high as a result - and once again, difficult decisions lie ahead of us.

I believe the same four principles that guided us through last year's budget deliberations will help us again this year.

Protect and maintain essential city services. Keep any tax increase to a minimum. Continue working to keep Toronto safe and secure and keep improving the financial accountability of our city.

If we remain true to these four principles, we will pass a budget that we all can be proud of.