Financial Impact to the City of Toronto
- Recent Provincial Actions
The Strategic Policies and Priorities Committee recommends the adoption of the
following report (October 19, 1998) from the Chief Financial Officer and Treasurer:
Purpose:
The purpose of this report is to report on the preliminary financial impact to the City resulting
from Provincial actions.
Funding Sources, Financial Implications and Impact Statement:
A variety of Provincial actions as described in this report will cause a preliminary net shortfall
of $10.4 million.
Recommendations:
It is recommended that:
(1)Council request the Province for a $10.4 million grant or offset from the City's next Local
Services Realignment (LSR) installment payment;
(2)should staff discussions with Provincial authorities not result in significant results or
meaningful action, the Chief Financial Officer and Treasurer be authorized to deduct $10.4
million (or appropriate updated amount) from either the school board repayment or the next
LSR installment.
Council Reference/Background/History:
Over the past several months since Council adopted the 1998 Operating Budget, the Province
has taken a variety of steps which will have a deleterious financial impact on the City.
Comments and/or Discussion and/or Justification:
As result of Provincial actions, the City will experience negative financial implications from
the following issues:
(1)The delay in receiving the assessment rolls from the Province will result in an investment
income loss of approximately of $12.3 million and penalty income loss, from rate payers who
are traditionally overdue on payment of their accounts, of $5 million.
(2)The City has not yet received a supplementary assessment tape from the Province and
therefore is foregoing investment and penalty income. Our preliminary estimate is a
$711,000.00 investment income loss.
(3)In April of 1998, the City's estimated cost for services provided by the Ontario Property
Assessment Corporation (OPAC) was $24.7 million (this figure was received from the
Province). In September the City received an invoice from OPAC for $25.9 million, an
increase of $1.2 million. The City's budget estimates did not provide for this additional cost.
The Province has taken some action to partially offset these financial implications:
(1)At the end of June, the Province made payments to the Toronto District School Board and
the Toronto District Separate School Board ($479 million in total) on behalf of the City. The
City is expected to repay these funds to the to the Province at the end of October. The reason
for this action is to allow the City to earn investment income on these funds and thereby
compensate the City for the delay in the assessment rolls. The City will earn approximately
$7.2 million in investment income on these funds.
The City has paid the school boards its third quarterly payment at the end of September and
the fourth quarterly payment is due December 15th. A report will be brought forward to the
Budget Committee at its meeting of November 10th to discuss the City's payment
arrangements with the school boards.
(2)The Province has extended the payment date for the first and second installments of the
LSR arrangements. The delay in these $65 million installments will provide the City with an
additional $1.6 million in investment income. It should be noted that Council approved
payment of these installment amounts at its meeting of October 2, 1998.
All of the above results in a $10.4 million net shortfall to the City (see table below). Given the
lack of information received from the Province and the Finance Department's intention to
further review each of the items, the shortfall is a preliminary estimate.
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Summary - Net Loss to the City from Provincial Actions
The Chief Financial Officer and Treasurer has written a letter to the Deputy Minister of
Finance expressing the City's concerns. City officials have requested a meeting with
Provincial officials to discuss these issues and to arrive at a solution which will enable the
Province to fulfill its commitment that its actions in this regard would be revenue neutral.
Council will be informed on the outcome of these discussions.
Should the discussions not resolve the shortfall issue Council would have the following
recommended options:
(2)request Provincial authorities for a $10.4 million offset in the City's next LSR installment
payment; or
(3)Council authorize the Chief Financial Officer and Treasurer deduct $10.4 million from
either the school board repayment or the LSR installment payment.
Even if the Province were to extend the repayment date for the school board funds, the City
would not earn sufficient investment income ($3.7 million) for the 1998 calendar year to
compensate for the shortfall. Also, the City is not required to make any other payments to the
Province that are larger than the school board repayment. Therefore delaying a payment to the
Province is not a feasible option.
Len Brittain, Director of Treasury & Financial Services, Telephone: 392-5380, Fax:
392-3649; E-mail: lbrittai@city.toronto.on.ca
