One key consideration in developing financial strategies for the City is the balancing of Stabilization Strategies versus Growth Strategies. Given the current financial condition is not sustainable, priority should be to stabilize the City's financial strategies before any focus on growth. One example is that financial resources should be allocated for the State of Good Repair before financing new assets to meet new demands.

Short and Long-Term Strategies:

As part of the 2003 Ad Hoc Committee on the Five-Year Fiscal Plan recommendations, the City has engaged in the development of the following short and long-term strategies.

1. Asset and Liability Funding Strategies
2. Expenditure Strategies
3. Revenue Strategies
4. A New Deal

1. Asset and Liability Funding Strategies focus on:

     a. Asset maintenance strategies
     b. Capital financing strategies
     c. Reserve and Reserve fund strategies
     d. Risk management strategies
     e. Liability funding strategies

2. Expenditure Strategies within the City's control

Some of the strategies to deal with fiscal challenges and ongoing pressures include:

      a. Service efficiencies
      b. Best practices - performance measures and benchmarking
      c. Targeted service level reduction
      d. Program/service reviews/prioritization
      e. Targeted service elimination/rationalization
      f. Multi-year financial and business plans

3. Revenue Strategies within the City's control

 Two main revenue items that are within the City's control are:

      a. User fees (each 1% increase in user fes would yield $10.3           million)

      b. Property tax (Each 1% increase in property tax would yield          $11.0 million under Bill 140 which restricts tax increases to          residential taxpayers only. If the City had access to its full tax          base, a 1% tax increase would generate $29 million in new          revenues.)

At the assumed inflation rate of 2% to 3%, these revenue strategies together will generate no more than $63 million a year, substantially less than the total "needs" estimate of $210 million to $272 million.

4. A New Funding Partnership(New Deal)

The gap between the City's forecasted expenditures and revenues is significant and growing, even with new strategies in the City's control. The mismatch between the City's fiscal responsibilities and financial resources underlines the need for a New Deal as a long-term strategy.

The New Deal is made up of five parts:

1. Rationalizing the existing deal in terms of Property Tax, Competitiveness, Child care, Hostels, the Ontario Disability Support Program (ODSP), and Public Health
2. New cost-sharing for specific programs - New arrangements are recommended for Transit Capital and Operating Expenses, and Transportation Capital
3. Proposed uploading of services - These include Social housing, Social assistance benefits, and GO capital expansion
4. New funding sources - These include share of the existing fuel tax, vehicle registration fees, parking fees, provincial sales tax, and goods and services tax.
5. City service prioritization review - Council should develop an approach to examine and prioritize programs/services based on criteria approved by the Committee. This approach will ensure that allocation of tax dollars to City services meet Committee prioritees.

Next Steps