It was a busy day, with two federal funding announcements. Read all about it, along with a look at breaking news on the Mayor’s budget, and new staff reports coming to Council to advance the City’s long-term financial plan and its goal of putting the municipality on a firm financial foundation.

Federal Government Commits Funds for Refugee Services in the Lead-Up to the Mayor’s Budget Launch

With less than a day to go before the Mayor’s budget launch, set for tomorrow, Thursday, February 1, the federal government has announced $362.4 million in new funding to provide additional shelter and support to refugees and asylum seekers across Canada. The announcement comes after considerable and ongoing pressure — from Mayor Chow, City Council, and concerned residents and groups across Toronto (including Social Planning Toronto and Daily Bread Food Bank), as well as the Quebec government — calling on the federal government to meet its responsibilities to refugees. Toronto City Council has asked the federal government to provide $250 million in new funding for the shelter and support needs of refugees and asylum seekers. The money is included as assumed revenue from the federal government in the City’s 2024 budget, but until today there was no word whether the feds would pay up. 

The federal announcement indicated that Quebec would receive $100 million of the $362.4 million in new funding, but Toronto’s share of the funding is yet to be announced. Will the federal government meet its full responsibility to refugees and provide the $250 million that the Mayor and Council have indicated is required? Unlikely with only $262.4 million remaining after Quebec's share. The funding announcement is an important first step, but the federal government needs to ensure full funding for shelter and support services for refugees and asylum seekers. (UPDATE: The federal government confirmed the City of Toronto would receive $162 million in new funding for the shelter and support needs of refugees and asylum seekers. Mayor Chow appeared to suggest that the full federal funding would be provided through installments later in the year.)

Earlier Federal Announcement Increases Police Funding Focused on Addressing Auto Thefts

Earlier in the day, the federal government also announced $121 million in new funding for police “to prevent crime and combat auto theft in Ontario.” This new funding will increase the 2024 Toronto Police Service (TPS) budget. No details on the allocation for the TPS at this time. 

As explained in Briefing Note #17, the City staff–prepared budget for the TPS includes $59.7 million in added budget support from the City of Toronto, including a $25 million increase from property tax revenues. This figure does not include funds set aside to cover salary and benefit increases that will result from this year’s collective bargaining process. Once the collective agreement is settled, the City of Toronto will transfer millions more to the TPS. The federal funding announcement means an even bigger budget increase for the TPS. 

Could the new federal funds free up funding for urgent and underfunded services like emergency shelter and support services (with unhoused people sleeping on TTC buses), more affordable housing (with more than 85,000 households on the waiting list), or funding for the Scarborough busway (because Scarborough deserves better)? The City needs to use every dollar to address these and other critical needs.  

Breaking News on the Mayor’s Budget and the Budget Launch Countdown

Today’s federal announcements weren’t the only story to make the news. This evening, the Toronto Star printed an exclusive, reporting the Mayor’s plan to recommend a 9.5% residential property tax increase (including City Building Fund levy), down from the 10.5% increase proposed in the staff-prepared budget. Support on Council for the proposed property tax increase appears mixed. Knocking the increase down by one percentage point will require the Mayor and Council to find $42.2 million in order to balance the books. 

Mayor Chow announced this week her plan to recommend a lower residential property tax increase than proposed in the staff-prepared budget. Tonight’s Star story reported the Mayor’s plan is to reduce the multi-residential property tax increase from 4.5% (in the staff-prepared budget) to 3.5%. Speaking to the media, Mayor Chow said this measure is necessary to protect tenants from rent hikes associated with the property tax increase. Under provincial legislation, landlords can apply to pass on some of the costs of “extraordinary” municipal tax increases to their tenants through an “above the guideline” rent increase. This year, an extraordinary increase is defined as a municipal tax increase above 3.75%; as such, the proposed rate increase in the staff-prepared budget meets the definition. Read more about this issue here and here, and watch for our next City Budget Watch post for more analysis.

The Mayor has also indicated she is considering recommendations from the Budget Committee and input from community members, including residents who participated in pre-budget consultations, telephone town halls, and budget deputations, in the development of her budget. (Read our highlights from the pre-budget consultations and deputation sessions.)

Addressing the Canadian Club Toronto on Monday, Mayor Chow remarked, “We have the power to shape the city that we want. With this budget, we can get Toronto back on track. A more affordable, safe, and caring city — a place where everyone belongs — that’s our shared goal.” We will see how the Mayor’s vision for Toronto tracks with her budget for Toronto on Thursday. 

The Mayor’s budget is set to launch tomorrow (Thursday, February 1) with final Council votes taking place on February 14.  

Fixing Toronto’s Finances for the Long Term: New City Staff Reports Coming to February 14 Council Meeting 

At its February 14 meeting, Toronto City Council will also review new staff reports and analysis on graduated municipal property tax rates and the City’s multi-year budget approach as part of its work to advance the Council-endorsed Long-Term Financial Plan, which aims to fix the City’s long-standing fiscal troubles. Briefing Note #15, Updating Long-Term Financial Plan: Status Update provides further details: 

Select parts of table reproduced from City of Toronto (2024, January 26). Briefing Note #15, Updating Long-Term Financial Plan: Status Update.

Additional staff reports and analysis on the commercial parking levy, City assets, development charges, and building emissions performance standards are expected later in the year. Details from Briefing Note #15 are presented below:

Select parts of table reproduced from City of Toronto (2024, January 26). Briefing Note #15, Updating Long-Term Financial Plan: Status Update.

The briefing note details additional activities, including communication and dialogue with the provincial and federal governments about a range of funding issues.

The City, Mayor, and Council have taken some important steps to address the municipality’s “chronic structural fiscal deficit,” including:

• achieving a landmark new deal with the provincial government that increases funding for critical services and commits to uploading responsibility for the costly Gardiner Expressway and Don Valley Parkway to the province;
• generating more revenue for City services and infrastructure through an increase in the Municipal Land Transfer Tax rate for higher-value homes, an increase to the Vacant Home Tax from 1% to 3% of the assessed value of the home, and a higher dividend from the Toronto Parking Authority; and
• continuing to implement an annual 1.5% increase to the City Building Fund for transit and housing infrastructure.

Toronto City Council will also be considering the adoption of a Municipal Non-Resident Speculation Tax (MNRST) and the revamp and scaling back of the Imagination, Manufacturing, Innovation and Technology (IMIT) Property Tax Incentive Program. If adopted, the MNRST will be applied to foreign buyers of homes in the City of Toronto and will not apply to Canadian citizens or permanent residents. Staff also recommended provisions that would provide exemptions and rebates for certain groups, including individuals who become permanent residents within four years of purchasing their home. IMIT is a grant program that reduces property taxes to encourage certain types of development, such as the building of office towers — which isn’t so important now, given pandemic effects on demand for office space. Both are policy measures with some impact on revenues, with MNRST generating revenue and changes to IMIT reducing costs. 

One critical aspect of the City’s Long-Term Financial Plan is a move to realistic property taxes. For the first time in over a decade, this year Toronto City Council is considering a property tax increase above the rate of inflation. If Council supports a 9.5% property tax increase, it will generate hundreds of millions in additional funding to safeguard critical services and allow for the expansion of services essential to improving the quality of life of Toronto residents and supporting the wellbeing of many of our most vulnerable neighbours.

There is a long road ahead to fix what ails the city, fund the services needed to address the multiple crises impacting residents, and put the municipality on stable financial footing. City Council endorsed the Long-Term Financial Plan as a strategy to achieve this goal. Budget decisions are an important part of this work. Toronto City Council’s decisions on the 2024 City budget will determine whether the municipality moves forward toward a financially stable future with the resources needed to advance equity and create a more socially just and sustainable city for all.

Image: Screenshot from thestar.com