News release

December 3, 2002
Proposed 2003 City Budget caps tax increase at 3%

By managing efficiently, implementing cost saving measures and limiting new programs, City staff tabled a proposed 2003 budget today that reflects some extraordinary pressures but caps any projected tax increase at 3% or less, the lowest in three years.

Highlights of this year's proposed budget include maintaining 2002 service levels, particularly for the three emergency services, limiting capital spending thereby helping to manage and limit any debt increases, continued improvements in efficient service delivery, and extraordinary pressures on the operating budget, for which the City will seek assistance.

Chief Administrative Officer Shirley Hoy singled out the closure of the Keele Valley landfill site at the end of December, transit operating costs and salary adjustments for the three emergency services above 3%, as "extraordinary pressures" that resulted in the $6.4 billion budget containing a projected tax increase.

"As in previous years, Bill 140 (provincial legislation) means that we have access to only one third of our tax base and that any residential tax increase is tripled for Toronto homeowners," stated CAO Hoy. "A 3% tax increase on the residential class for 2003 would raise approximately $32 million in additional tax revenue. If this could be spread across the total tax base the residential tax increase could be reduced to approximately 1.1 %, less than the rate of inflation."

In his opening remarks at the joint Policy and Finance and Budget Advisory Committees meeting this morning, Mayor Mel Lastman pointed out that it's not going to be easy to reach 3%. "The pressure on our 2003 Budget is incredibly high. Once again, difficult decisions lie ahead of us - and we're going to have to work harder than ever to deliver a budget within our means."

City of Toronto Budget Chair David Shiner emphasized that, "there are no painless ways to absorb all of this year's budget impacts." He added, "staff have worked hard to prepare a budget that maintains existing service levels and absorbs the pressures anticipated in 2003 with the exception of the Keele Valley landfill closure, TTC operating costs, and salary settlements for emergency services above the cost of living and inflation."

The proposed budget ensures that Toronto residents continue to get good value for their tax dollars by protecting service levels provided by key areas such as Police, Fire, Emergency Medical Services and other areas such as the homelessness and waste diversion, maintaining services introduced by the new City of Toronto since 1998 and maximizing revenues from other levels of government.

The proposed $993 million capital budget maximizes federal/provincial cost sharing for transit, but requires all other ABCs and departments to propose no new debt pressures in order for the City to remain within its affordability guidelines.

The City's Chief Financial Officer and Treasurer, Joe Pennachetti stated, "Relying principally on the property tax base remains an inappropriate means of funding the majority of the City's services." He added, "we need new sustainable revenue sources to address the need for growth and service demands in the City of Toronto through new financial partnerships with the provincial and federal governments."

The City is engaged in productive discussions with the province to seek assistance in offsetting some of the extraordinary operating budget pressures in 2003.

Council will begin examining the 2003 City Budget on December 3. Standing Committee reviews will begin the week of December 9 and continue throughout December and into January 2003. Final approval of the capital and operating budgets by Council is scheduled for late February 2003.