Staff-recommended budget focuses on transit, poverty reduction, and public safety.
City Manager Joe Pennachetti and Budget Chief Gary Crawford (Ward 36, Scarborough Southwest) launched the proposed 2015 municipal budget in City Hall chambers on Tuesday morning. It prioritizes funding for transit, poverty reduction, and public safety—and just manages to keep the City under its self-imposed debt ceiling.
In what is essentially a rebuke to council for its transit cutbacks in the previous Ford and Stintz administration, the budget includes funding for previously announced TTC service improvements, which will cost $34.5 million in this year’s operating budget.
The budget also includes $7.9 million for “new and enhanced investment” in shelter, support, and housing; $3.7 million in Emergency Medical Services; $1.2 million in Fire Services; and $500,000 in tree canopy investment. Overall, there’s $75 million for new and enhanced services in the $9.9-billion operating budget.
In order to balance the budget, as council is required to do by law, City staff propose a residential property tax revenue increase of 2.25 per cent. Of this, 1.25 per cent will go to providing the same services the City offers today, and another 1 per cent will pay for new and enhanced services.
This property tax increase does not include the 0.5 per cent property tax levy that will be used to fund the proposed Scarborough subway extension. For the average Toronto household, the overall 2.75 per cent property tax increase will mean roughly $71.50 extra a year.
The most recent inflation number for Toronto is 2.6 per cent.
Council faced considerable budget-balancing challenges coming into this year, but managed to overcome them thanks to some positive developments.
The City’s proposed budget relies on the assumption that the province will come up with $86 million in pooling compensation grants—housing money that Queen’s Park withdrew in late 2013 in a move that came as a surprise to City Hall. CFO Rob Rossini indicated that City staff have been having long conversations with their provincial counterparts, and he’s hopeful that something will be finalized “maybe as early as next week.” If the City does not receive that $86 million—an amount equivalent to the revenue that would be produced by a 4 per cent property tax increase—it will need to investigate other funding options.
The City’s Land Transfer Tax also once again outperformed. The City earned $35 million more than expected as the result of a real estate market that continues to be red-hot.
The City also relied on one-time funding: increased dividend income from Toronto Hydro for $13 million, reserve draws of $23 million, an increase in user fees of $35 million, and $5 million from TTC ridership growth.
Notably, the budget also assumes a zero per cent increase in police expenditures, which is the largest budget line item. However, contract negotiations with the Toronto Police Service are ongoing, and the union will presumably be seeking some kind of raise. Staffing accounts for almost 90 per cent of the police budget.
Investments are also being made in transportation infrastructure: $443 million in additional capital funding, for example, will be used to accelerate repairs to the Gardiner Expressway. The proposed acceleration will cut the 20-year project down to 12 years.
Taking into account money allocated to the Scarborough subway project, the budget will allow the City to remain just under its self-imposed debt ceiling, reaching 14.6 per cent of its 15 per cent debt ceiling limit—although that’s not counting the $7 billion needed for unfunded long-term capital liabilities, particularly in transit, transportation, housing, and water infrastructure. The capital budget also does not include Mayor John Tory’s signature campaign promise, SmartTrack, which would significantly increase financial pressure. In the future, council could either take capital projects out of the budget, vote to break through its debt ceiling, or increase property taxes.