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City Manager Sounds Alarm on Toronto’s Future

Toronto's top civil servant warns that the City is facing a funding crisis.

Photo by Steve M, from the Torontoist Flickr pool.

This past Tuesday during a speech he gave at U of T’s Institute on Municipal Finance and Governance, city manager Joe Pennachetti sounded the alarm on the City’s structural funding gap. Pennachetti is the City’s top civil servant, and his warning—that the City will need $500 million more in annual funding, whether through 1 per cent of the City’s contribution to the sales tax, transfer payments from other orders of government, or the uploading of services—is urgent, serious, and deserves more attention.

Pennachetti has made this point before, but never so explicitly: he spoke of the ticking time bomb that is the City’s housing portfolio, and cautioned that if the City does not get funding from other orders of government in the next few years, the Toronto Community Housing Corporation—facing increasingly serious repair issues—might be forced to evict residents from their homes.

Toronto currently has a housing capital repair backlog of $864 million, a total that has grown by $220 million in the past three years. At current funding levels, the repair backlog will grow to $3.6 billion within 10 years. The TCHC waiting list is longer than it has ever been, with 91,000 on the waiting list for one of TCHC’s 58,000 units—and the wait usually takes between eight and 10 years.

Pennachetti also highlighted looming transit challenges: the TTC currently relies on the fare box more than does any other major North American city, and it has seen its already low subsidy decline by 14 per cent per rider during the current council term. The city manager says the organization also suffers from a lack of operational funding contributions from the provincial government. At the same time, there’s a $2.7-billion unfunded liability when it comes to state of good repair for transit—and Metrolinx estimates that the Greater Toronto and Hamilton region would need an additional $2 billion in ongoing funding just to maintain congestion at current levels.

When it comes to funding big projects like transit or housing, Toronto’s problems are largely structural. No other city in the world, for example, funds a comparable housing portfolio through property tax.

But for all of the criticism of Toronto’s structural problems, there’s also the implicit criticism that Toronto’s civic leaders are not addressing the issue. The items Pennachetti mentioned have been largely ignored by the current crop of mayoral candidates—who have generally preferred to draw transit lines on a map without saying where ongoing funding will come from, or criticize former TCHC CEO Gene Jones’ performance without addressing what kinds of systemic solutions they would support to help residents. These issues have continued to grow during Toronto’s current boom, underscoring the fact that if the City wants to solve these ongoing problems, it must work on sustainable solutions immediately.

But this raises a different kind of structural question: If the political courage to confront these issues won’t come from risk-averse political candidates, who will answer Pennachetti’s warnings?


  • hamish

    It’s good that Mr. Pennachetti is being somewhat responsible. Given that Vancouver found that each car had an annual $2700 per car per year amount of avoided cost and subsidy etc., isn’t it beyond time for a Vehicle Registration Tax? And doing a Car Services review, the placing of all the varied costs now hidden in various of our budgets into a single line item as the TTC does? And the commitment to rehab/use the Gardiner will eat $2,000,000,000 over 25 years and it’s a pretty big gift to mostly out of town motorists, and yet transit systems in the same corridor have user pay.

    • bobloblawbloblawblah

      sn’t it beyond time for a Vehicle Registration Tax?”

      Rob Ford is going to be very, very, very, very angry with you.

      • lovetoronto

        Yes. Bring back the Vehicle Registration Tax and allocated it properly. I along with MANY Torontonians had/have NO problem with paying this form of taxation AT ALL. Bring it on. Use it wisely. We need money in the coffer.

        • bobloblawbloblawblah

          I think the issue with Miller’s VRT was that a good number of motorists resented that they were paying a tax in the city that was dedicated to transit. It didn’t matter that better transit helped them by removing some drivers from our clogged streets, they still felt gouged and had the perception that people riding transit weren’t pulling their weight. Changing that view is the hard part — selling the tax as something that benefits all is what needs to be done.

          • m_ax

            I think the problem was actually the opposite, the Personal Vehicle Tax went into general revenues and was not targeted to transit or roads. Instead it was used to balance the City’s operating budget overall, and people felt gouged by it because of that. (Though after the tax was cut, the cost of a Metropass rose $60/year, which was coincidentally the exact amount of the PVT).

            Had the City linked it to transportation, it’s hard to know how people would have responded. Polls coming out over the last couple of years have shown time after time that people will pay new and/or higher taxes, provided those taxes get dedicated to improving transit/transportation infrastructure.

            That said I can’t agree more with your point – people need to understand that improvements to transit benefit everyone. Even if you’re a driver, paying dedicated taxes for transit will take other cars off the road and will end up benefiting you.

    • tyrannosaurus_rek

      It’s beyond time for a lot of revenue-generating tools for the city and examining the bigger transportation picture.

  • ADL0417

    Vehicle Registration Tax? Why? Drivers already pay a disproportionate amount of taxes already in this pot hole pit of a city. Why doesn’t someone suggest creating a licensing system for cyclists, both the rider and the bicycle. They are using the roads, but not following the rules of the road. Therefore, there should be a cycling test for cyclists which will come with a fee like a driver’s test so that the rules of the road are learned and both a written and practical test would be required. Then the vehicle(bicycle) would have to be registered with a licence plate as the automobile requires a licence plate, thus another tax and source of revenue. As a result of these initiatives, then the traffic enforcers, could actually enforce the law when cyclists break the laws of the road and pay the consequence of breaking those laws by having to pay a ticket, just like the automobile driver. Think of the revenue. Think of the increased safety(the word used for marketing and justifying traffic violations and fines for those violations) on the roads. Then the city can get to the pedestrians who cross streets on red lights while texting, and cyclists who talk on their phones while riding, and fine them as well.

    • KludgeGrrl

      “Vehicle Registration Tax? Why? Drivers already pay a disproportionate amount of taxes already in this pot hole pit of a city.”

      How do you figure? Our revenue comes primarily from property tax. And there is the land-transfer tax, which is also tied to property. That goes to repair roads, install signs, etc… How are *drivers* paying more? True, they pay tax on the gasoline they purchase, but that doesn’t go to the city.

      You may not like cyclists (or pedestrians either) but I am at a loss to see how they are not paying to for the infrastructure that allows cars to function. I sense a troll…