Toronto's 2010 Operating Budget (Sort of) Holds the Line
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Toronto’s 2010 Operating Budget (Sort of) Holds the Line

Playing the odds on stable transit funding. Illustration by Jeremy Kai/Torontoist.

The City released its 2010 draft operating budget today, and…at least it’s balanced [PDF]. The budget is largely a survival strategy for overcoming this year’s projected shortfall, and was followed up by a sweeping outline of everything we’re doing right [PDF]. Despite the recognition of what’s going well, the seriousness of the City’s financial straits is apparent: 2010 will see increased taxes, increased user fees, and a continuing, chronic dependence on one-time funding sources.
Miller kicked off this morning’s meeting by outlining ten facts to “keep in mind” when reading the budget. He book-ended his presentation with the weightiest reminders: we have the lowest property taxes in the GTA, and “you can’t have a great city for free.” In other words, we are going to be paying more.

Toronto is facing a persistent structural shortfall that can’t be kicked; this year’s gap registers at $433 million. Rooted in the recession, a growing demand for services, and an unpredictable funding relationship with the province (and with some historical roots in Mel Lastman’s property-tax freeze from 1998–2000 and Mike Harris–era downloading), this shortfall has forced the City to look to unpopular and unsustainable solutions to balance the books.
In the past, the city has scrimped on spending and dug into the coffers to make ends meet, and this year’s story is no different. But repeated instances of tapping our reserves means they are starting to run dry. As the budget report outlines: the “traditional fiscal funding formula no longer works for Canada’s largest city.”
The City has tackled this year’s budgetary pressures with a combination of sustainable and unsustainable strategies (these classifications come from the City’s budget outline):

  • Belt-tightening: $172 million in “cost reductions, service efficiencies and service changes.”
  • Uploading Ontario Works costs to the province: $119 million.
  • TCC fare hike: a projected $50 million.

One-time or unsustainable:

  • Savings from the city workers’ strike: $31 million in “labour disruption savings.”
  • Reserve draws: $63 million.
  • Increased user fees: $13 million.
  • Increased property taxes: $87 million.

Residential property taxes will increase 4% this year, adding ninety-three dollars to the average household’s bill. This tax increased by 3.75% in 2008 and 4% in 2009, and it caused a stir. Miller defended this year’s hike, stressing that Toronto’s property taxes are still lower than in Markham, Vaughan, Mississauga, and other 905 communities. Business property taxes will also increase 1.33%.
And, of course, we can’t afford the TTC. But lo, a solution! The 2011 budget forecast banks on the province committing to a Toronto-Ontario partnership to restore permanent, sustainable funding to the TTC. The City hopes to “confirm” such an agreement by the end of this year, which would be implemented on December 1, 2011. (Don’t get too excited: this goal was also outlined in last year’s budget [PDF].) Meanwhile, this year’s budget includes a provisional $219 million from the prior year’s surplus (yes, we ran an unexpected surplus in 2009) to cover for the obvious absence of current provincial TTC funding.
There are no plans in the works to privatize city services or “monetize assets,” as the City is of the view that this would only provide short-term debt relief, and would not bring in enough to solve the shortfall.
The details of the budget will be picked over by council over the next two months. This includes two open sessions on March 1 and 2 to hear public feedback.
This year’s operating budget is an eerie echo of past years. As always, without any new tools in its budgetary toolkit, the City is still in the position of looking for ways to bridge its shortfall without compromising much-needed services. The next few weeks of discussions, in public and in council, will determine the extent to which the balance they’ve tried to strike will hold.