Today, Toronto City Council approved the Updated Long Term Financial Plan and a series of actions to address Toronto’s unprecedented financial crisis.
As detailed in the 2023 Financial Update and Outlook report to Council earlier this year, the City of Toronto is experiencing a significant immediate and long-term financial crisis: an estimated $1.5 billion starting pressure for the 2024 operating budget and an estimated $29.5 billion needed for the 10-year Capital Plan both of which are part of a $46.5 billion shortfall identified over the next 10 years.
However, even with the actions approved by Council today, immediate and sustained support from the Government of Canada and the Province of Ontario is urgently needed. As a result, Council requested the Province of Ontario authorize new revenue tools that grow with the economy and reflect the scope and complexity of the fourth largest city in North America, such as a municipal sales tax on the purchase of goods and services in Toronto or a share of existing sales taxes.
In the absence of a new funding model or growth-related revenue tools, Council notified the Government of Canada and the Province of Ontario that the City will be forced to reduce essential service levels and cancel capital projects that benefit the region, province and country and contribute to shared priorities such as housing, transit, refugee response and climate action.
Toronto steps up
No single action will address the City’s immediate and long-term financial crisis. Council acknowledged the magnitude of the City’s financial crisis and approved to implement or explore multiple actions. These actions will enhance existing policy and revenue tools and introduce new ones, reduce capital expenditures, optimize asset management and improve budget planning and financial oversight.
As immediate first steps, Council directed staff to:
In addition, Council requested staff reports for the introduction of the following new revenue and policy tools:
Council also requested staff reports to explore reducing expenditures and forgone revenues, optimizing asset management and the feasibility of additional revenue tools:
Previous City actions
Prior to today’s Council decisions, the City had already taken significant action to promote financial sustainability however current provincial legislation limits City revenue options almost exclusively to the taxation of property and its related uses. Actions previously taken include:
These previous actions combined with today’s Council decisions are still not enough to address the 2024 Budget shortfall and City’s long-term financial crisis. The City faces real and urgent consequences starting next year if additional actions are not taken by the Government of Canada and the Province of Ontario.
Property taxes cannot fund provincial and federal responsibilities
On an ongoing basis, the City delivers key services that are extensions of federal and provincial responsibilities such as child care, long-term care, employment and social services, public health and refugee response. Approximately $1.1 billion, or 22 per cent, of the City’s annual property tax revenues reduce the financial burden for other orders of government and benefits the greater region.
Consequently, in addition to actions within City authority, Council informed the Province of Ontario that:
Council also requested the Province of Ontario upload the responsibility and costs associated with the continued construction and maintenance of the Frederick G. Gardiner Expressway and the Don Valley Parkway, including any future capital and operating costs.
The gap between City revenues and expenditures was identified in 2016 and has been a significant part of each Budget cycle since. Related reports are available on the City’s Long Term Financial Plan webpage.
The updated Long Term Financial Plan and accompanying staff report is available on the City’s website.
The Council meeting is available on the Toronto City Council Live YouTube channel.
“The people of Toronto deserve a city where they can find affordable housing, rely on the TTC to get to work on time and access the programs that make life in our city better. Toronto is stepping up to meet our significant financial challenges and deliver the services people need. Despite the multiple actions approved by Council today we still need our partners – the Government of Canada and the Province of Ontario – to step up for the people of Toronto.”
– Mayor Olivia Chow
“The City is stepping up to face the significant risks and challenges identified in the City’s first Long Term Financial Plan, but we cannot address this crisis alone. It is time for the Government of Canada and the Province of Ontario to step up and give Toronto the funding and revenue tools we need to continue being the economic engine of the region, province and country.”
– Councillor Shelley Carroll (Don Valley North), Chair of the Budget Committee
Toronto is home to more than three million people whose diversity and experiences make this great city Canada’s leading economic engine and one of the world’s most diverse and livable cities. As the fourth largest city in North America, Toronto is a global leader in technology, finance, film, music, culture and innovation and climate action, and consistently places at the top of international rankings due to investments championed by its government, residents and businesses. For more information visit the City’s website or follow us on Twitter, Instagram or Facebook.