2017 City Budget: TTC, Taxes and More

The TTC Budget

Read some great analysis on the TTC budget from Steve Munro for the Torontoist and TTCriders. As the TTC budget stands, prepare for longer waits, more crowded conditions and higher fares - and that's if the City provides more funding to the TTC to fill the hole in its budget. If it doesn't, then we're looking at larger fare increases than already proposed, elimination of free rides for children under 12 and elimination of the discount metropass plan. And there's more trouble ahead in 2018. 

 

 TTC_9000.jpg 

Photo credit: 분당선M


Property Taxes & City Services

Property taxes are an important revenue source for the City of Toronto. They make up 39% of the City's revenues that pay for vital programs and services. But when the City keeps property taxes artificially low, we starve important City programs and services - TTC, recreation programs, student nutrition, public libraries, public health programs, Toronto Community Housing, homeless prevention services, affordable housing supports - of much-needed investment. 

The 2017 budget proposes a residential property tax increase of 2% which is below the rate of inflation for Toronto (latest inflation rate for Toronto is 2.3%). The City usually increases non-residential property taxes at 1/3 the residential rate. The 2017 budget proposes an increase of 0% for multi-residential buildings, 1% for commercial, and 0.67% for industrial. That means the overall property tax increase would be 1.39% which is well below inflation. When the City sets property tax increases below inflation it doesn't bring in enough revenue to maintain existing services. Not such a good plan for building a great city.

For each 1% increase in residential property taxes, the City brings in $25.2 million to pay for public services (assuming non-residential property taxes go up at 1/3 the residential rate). That's money we could use to improve our city and the lives of Toronto residents.

Are we overtaxed? Toronto's residential property taxes are the lowest among all municipalities in the GTA, Ottawa and Hamilton.

 Toronto_property_taxes.jpg

 Source: City of Toronto, 2016 City of Toronto budget presentation.


 

Won't property tax increases hurt homeowners with modest incomes? The City has programs to cancel or defer property tax increases for seniors and residents with disabilities with modest incomes, as well as, residents experiencing serious health problems. These programs could be adapted to address concerns for homeowners with modest means.

Under the proposed budget, the average homeowner, with a home worth $587,471 will pay an extra $96 on their property tax bill. This includes $55 for the 2% increase, $14 for the Mayor's City Building Fund to pay for vital infrastructure such as public transit and affordable housing, and $27 related to assessment/policy/regulation changes. That's an extra $1.85 a week.

If the residential property tax increase was 4% instead of 2%, the average homeowner would instead pay an extra $151 a year or $2.90 a week compared to their 2016 property tax bill.

It would bring in an extra $50.4 million to pay for city services like public transit, recreation, shelters, child care and community services. 

The average annual household income of Toronto homeowners is $115,948. Can homeowners afford to pay an extra $2.90 a week - less than the cost of a single ride on the TTC?

Property taxes alone won't bring in all of the revenue that the City needs but they are critical to paying for the range of public services communities require. Toronto City Council has been keeping property tax increases below the rate of inflation for several years. It's not a sustainable plan if we want to build a great city. 

Revenue Tool Options

The City Manager has identified ways for the City of Toronto to bring in more money to pay for public services. Here are some of the options:

Revenue_options.jpg

  • MLTT Harmonization: That's the Municipal Land Transfer Tax. When someone buys a home, they are charged the MLTT. The City could change the rates to match what the provincial government charges (an increase of 0.5 percentage points except for properties valued at over $40 million in which case the increase would be a 1 percentage point increase). It would generate an additional $77 million. First-time home buyers receive a rebate on the MLTT.
  • Commercial Tax: Commercial property tax increases are usually set at 1/3 the rate of the residential increase. If the residential increase is 3%, then the commercial tax goes up 1%. Under this proposal, instead of setting the rate increase at 1/3, it could be set at 1/2 of the residential property tax increase to bring in an additional $3.8 million.
  • TPA Income Share: That's the Toronto Parking Authority which runs the Green P parking lots. It's a good revenue source for the City. The City of Toronto usually gets 75% of income generated by the TPA but it could take 85% which would increase City revenues by $6.3 million.
  • Vacancy Rebate: Commercial and industrial properties that are vacant get a break on their property taxes. The City could eliminate this break which would raise $11 million in revenues.
  • Hotel Tax: With the permission of the provincial government, the City could apply a small tax to visitors staying in Toronto hotels. Other cities do it. The City of Toronto could raise $5 million with a hotel tax.

Additional options include adjusting the criteria for the MLTT so that any first-time home buyers purchasing a house for more than $700,000 would not receive a rebate. This would raise an additional $9 million.

Another option is to re-institute the vehicle registration tax. At $120 a year per vehicle, it could raise $75 million in 2017 and $100 million in subsequent years once it's fully implemented. Some people think that might be fair since TTC riders are going to pay an extra $60 in 2017 for public transit, and have experienced year-after-year transit fare increases. 

Another option is to increase the Billboard Tax for companies that advertise on Toronto billboards. A 25% increase in this tax would raise an additional $2 million for City services.

With the $91 million budget shortfall, the Mayor and City Council will have to decide whether to implement any of these taxes, cut services to the community, or do some combination of the two. The final vote takes place at the City Council meeting on February 15 and 16.

What about the Road Tolls?

Mayor Tory is recommending the adoption of road tolls on the Don Valley Parkway and the Gardiner Expressway. Those funds would help fund the roads and TTC capital budgets, not the City's operating budget, and it would take several years to implement. It's not a factor in the 2017 budget.  

 

Social Planning Toronto "Our Budget Matters" Forums

Have you joined us for one of our City Budget Forums? We've had great discussions at our Etobicoke and downtown forums.

Come out to find out more about the budget, what it means for your community, and how to get involved in the budget process. Next dates: Tuesday, December 13 in York, Wednesday, December 14 in North York and Scarborough. Register here

 

Budget Analysis

Check out our budget analysis on housing and homelessness

Stay tuned for analysis on community grants (i.e. Community Partnership and Investment Program; CPIP), parks, forestry and recreation, libraries, public health, child care, employment and social services, long-term care homes, and much more. 

© Copyright 2017 Social Planning Toronto. All rights reserved.