This Note is part of a series of Notes on key City issues to update City Council at the start of its 2018 – 2022 term.
The City’s Long-Term Financial Plan (LTFP) was received by Executive Committee in March 2018. City staff were directed to report on individual strategies and actions contained in the LTFP, as appropriate, following the start of the 2018 – 2022 Council term.
The LTFP provides a long-term framework for financial decision-making including a series of key actions available to City Council, and under Council direction, City staff. These are broken into a foundational step of integrating program and revenue decisions, and five principles to support implementation of Council’s direction.
City staff are in the process of implementing key actions contained in the LTFP and will report back to Executive Committee as appropriate.
City Council has given clear direction to implement a range of positive and proactive strategies to improve outcomes and provide real value to residents and businesses. Council has also given clear direction to maintain affordability by keeping costs in check and moderating tax increases. There are four key challenges to delivering on Council’s directions.
- Moderate but growing risk, notably revenue volatility: A number of risks – such as relying on cyclical revenue from the Municipal Land Transfer Tax and deferring known costs – threaten the City’s ability to maintain existing services, and impede consideration of any new services.
- Modernization and transformation: The City will continue to find savings and efficiencies each year through the budget process. However, substantial further savings and efficiencies will require accelerating business modernization and transformation initiatives.
- Gap between service commitments and revenue: There is a growing gap between the levels of spending required to meet City Council’s directions and available funding.
- Intergovernmental transfers: The City pays a disproportionate share of the costs to deliver services that provide broad benefits to the region and the province as a whole, including housing, transit, and anti-poverty initiatives.
Foundational step of integrating program and revenue decisions
- City Council has not traditionally adopted a broad policy perspective or cohesive work plan. Instead, strategies, plans, policies and programs are considered on a stand-alone and transactional basis.
- A foundational step is for City Council to set a clear strategic direction for the term of Council. A clear strategic direction would clarify Council’s agenda and priorities. It would provide a clearer direction for the City’s expenditure, revenue and service delivery strategies, including how to best allocate resources towards achieving Council’s goals. This is an opportunity for Council to clarify the scope of services it provides residents and businesses.
- The choice and mix of revenues and expenditures is up to City Council. Whatever the direction, Council’s desired expenditures should be linked to a long-term revenue strategy.
- The LTFP offers three illustrative options to help define the fundamental choices City Council could make to determine the direction of the City and form the basis for financial planning and future investment decisions:
- Focus on services to property,
- Maintain service levels, or
- Broader city building.
The LTFP outlines five key principles to address these challenges and support City Council’s strategic direction:
- Better information to support strategic decision making.
- Improve value for money.
- Secure adequate and fair revenue.
- Improve focus on financial balance sheet and health.
- Better integration with provincial and federal policies and fiscal direction.
The LTFP identifies a number of key actions to advance the above principles.
- From November 2016 to May 2017 the City consulted residents on the LTFP, including how the City can manage expenses, raise revenue, make the most of its assets, and make decisions that have financial impacts.
- City staff received submissions or held meetings with stakeholders and organizations from Toronto’s business community on potential revenue strategies.
Actions or Plans
Executive Committee provided two directions to staff at its meeting in March 2018:
- Requested the City Manager to report back on individual strategies and key actions contained within the LTFP to Executive Committee, as appropriate, following the start of the 2018 to 2022 term of City Council.
- Requested the City Manager include as part of the report back on individual strategies and key actions, future savings and efficiencies to improve value for money that result from transformation in the procurement process as it relates to desired performance specifications.