The Budget Committee's work on the 2021 City of Toronto budget is almost complete. Following the budget launch on January 14, the committee met to review the budget on January 20-22, receiving presentations from City staff, asking questions of staff, and voting on motions to request briefing notes to inform budget decisions. This week, the committee hosted two days of public hearings/deputations to hear from the public (Jan 25+26) and met for its first of two wrap up meetings. At the January 28th wrap up meeting, the committee received staff reports and briefing notes and had an opportunity to ask questions of staff. Here are the highlights from these recent jam-packed weeks.
High-level highlights from the 2021 City of Toronto staff-recommended tax-supported budget:
- The 2021 tax-supported operating budget is $12.09 billion; the tax-supported budget includes all City programs and services except for Toronto Water, Toronto Parking Authority (Green P parking), and solid waste management (garbage, recycling and compost) which are rate-supported budgets.
- The majority of the operating budget is funded through property taxes ($4.49 billion; 37.1% of the tax-supported operating budget) and federal and provincial funding ($4.10 billion; 33.9%), with the remainder from user fees and fines, the municipal land transfer tax, TTC fares, reserves, investment income, and other sources. In the pre-pandemic times, federal and provincial revenue sources made up about 20% of the operating budget.
- Municipal budgets are required by law to balance, with revenues equalling expenses. As a result of the pandemic, the City of Toronto's 2021 operating budget is short $856 million. The City's 'Plan A' for balancing the budget is for the federal and provincial government to cover the shortfall (included in the $4.10 billion mentioned above). In 2020, the federal and Ontario governments provided pandemic relief funding to local governments in response to COVID-19. More funds are needed to address the ongoing financial impact on municipalities. If the federal and Ontario government do not come through with the funds in 2021, the City has a troubling 'Plan B' which is to balance the budget by gutting the capital plan and raiding reserves which would have long-term adverse effects on the city.
- Why can't the City raise the revenue it needs? We're all for the City raising revenues to build a better city, and it should do its fair share. But the City does not have the revenue tools to cover the budget shortfall. For example, a 1% residential property tax increase raises about $30 million, give or take, from both residential and non-residential properties. It would take a residential property tax increase of approximately 28.5% to fill the hole in budget. In contrast, this year's proposed residential property tax increase is 0.7% and in recent years, it's been around 2%. The City has other revenue tools but they aren't sufficient to raise the kind of money it needs.
- Unlike municipalities, the federal and Ontario governments have income and wealth taxation powers and they can run deficits. On top of that, the Ontario government is sitting on over $6.4 billion in unallocated pandemic relief funds, according to recent analysis from the Canadian Centre for Policy Alternatives. This is truly an unprecedented moment that requires senior orders of government to act.
- The pandemic has revealed and exacerbated deep social, racial, and spatial inequities in our city. The Toronto Foundation's Fallout Report, Daily Bread Food Bank's Who's Hungry 2020 Report, and Social Planning Toronto's Community Voices Pave the Way to Recovery report document the heightened struggles of communities hard hit by the pandemic - and for many, these struggles are not new. Community groups and residents are looking for bolder and braver action from the City of Toronto and all orders of government.
- Community members participating in the People's Budget Platform, hosted by Social Planning Toronto, called for supports for residents disproportionately impacted by the pandemic, including racialized people, seniors, women, children, youth, people with disabilities, newcomers, refugees, and immigrants, action to make the city more accessible and livable for those who have been struggling even before the pandemic by providing safe and well-maintained affordable housing and public transit, reallocation of the Toronto police budget, measures to enhance resident leadership in local communities, support for long-term care homes, and help for small businesses and workers to access good jobs.
- Over 50 community organizations signed an open letter calling on Mayor Tory and Toronto City Council to focus the 2021 City budget on addressing inequality, moving resources where they're most needed, and addressing residents' urgent, unmet needs.
- Toronto Neighbourhood Centres, in partnership with 22 service agencies, advocacy groups and community organizations, released "Rethinking Community Safety", a report that identifies key challenges with the existing policing model and opportunities to reallocate $340 million of the police budget to fund proven, effective and community-based responses to address community safety.
- TTCriders, a public transit advocacy organization, called for several measures to make transit affordable and safe during the pandemic, including fully funding the Fair Pass program, increasing TTC service levels, reducing Wheel-Trans call wait times, investing in masks and safety and not fare inspection, speeding up transit priority, addressing unfunded capital needs, and increasing federal and provincial funding to address budget shortfalls and protect services.
- The Shelter and Housing Justice Network have six demands for immediate action to address the crisis of homelessness and criminalization of people experiencing homelessness in Toronto.
- Progress Toronto launched a petition campaign calling on the City of Toronto to end homelessness now. With shelters full, an estimated 1,000 to 1,500 people experiencing homelessness in Toronto are living in encampments - trying to survive a Canadian winter through a pandemic in the shadow of empty hotels. British Columbia and Vancouver have recently committed to provide housing to every person living in an encampment. The City of Toronto needs to follow suit and act now.
- That's the short list from residents and community groups looking for bold change in this year's budget. Every order of government has a critical role to play.
- The federal and provincial governments need to come through with more than the minimum to cover the budget shortfall. There's no good reason that the provincial government should be withholding billions in unallocated pandemic relief funds when communities are in dire need.
- The City of Toronto has options to reallocate funding from the police budget to support community safety. It could also prioritize capital projects that meet the city's environmental and equity goals, such as public transit projects and delay work that is not yet in process for the Gardiner Expressway East rebuild.
- The City could raise revenues to pay for critical public services. One option is to increase property taxes above the rate of inflation while also protecting residents who can't afford to pay by boosting the City's property tax increase cancellation and deferral programs. The City's proposed 0.7% increase to residential properties amounts to a $22 increase (42 cents a week) for the average homeowner with a home with an assessed value of $698,801. An additional 1 percentage point increase to residential property taxes (and related increases to other property classes) would raise around $30 million for important public services and cost the average homeowner an additional $31 and change for 2021. A 1.7% increase, instead of the proposed 0.7% increase, would amount to about $1 a week for a homeowner with a house worth almost $700,000. That's $30 million that could support people experiencing homelessness, for example.
- But haven't people been hard hit by the pandemic? Yes, that's for sure, and they are more likely to be renters. The City budget freezes property taxes for multi-residential buildings, as a requirement of provincial regulations. For homeowners who cannot afford a property tax increase, the City can boost its property tax increase cancellation and deferral programs to protect those homeowners. It's also the case that many people have not been financially impacted by the pandemic or their financial position has improved. Toronto is a city of deep and growing inequality. A rock-bottom property tax increase reduces available revenues for public services when many are in a position to contribute to the well-being of the city.
- The City could also increase the Municipal Land Transfer Tax for luxury homes, say for homes over $2 million or more. These additional revenues could support important public services, such as housing or hotels for folks in encampments.
- Over the next year, Toronto City Council should do the work necessary to introduce a vacant homes tax and commercial parking tax in 2022, as well as, revisit all of its options for increasing revenues in time for implementation by 2022. While the City of Toronto does not have adequate revenue tools to address the financial impact of the pandemic, City Council has also refused, for several years, to use the tools available to it to raise revenues that could improve life in Toronto. That position should be revisited.
- Sooner rather than later, the federal, provincial and local governments need to hammer out a new deal that corrects the limited taxing powers and restrictive fiscal arrangements that have left municipal governments with inadequate resources to deliver the programs, services and infrastructure residents need and that support more equitable and just communities.
- The City budget is a status quo budget in certain respects. It includes a low property tax increase (0.7%) and little investment in new and enhanced programs and services ($56 million in a $12 billion budget; the lowest amount in, at least, the past three years). It also has the lowest amount of new investment in poverty reduction, at $8.1 million, since the strategy was launched. The budget is unprecedented in the size of its shortfall, not surprising given the impact of COVID-19 on City revenues. It is also unique in the high amount of savings and efficiencies included this budget at $573 million. The City budget always includes reductions described as savings and efficiencies, but not nearly such a large amount as this year. This level of budget reduction raises a question. Can the City cut over half a billion from its budget without impacting services? City staff report that they can and they have.
We'll share more analysis from specific divisional, agency, board, and commission budgets next week.
The next few weeks are chock-full of City budget events. City Councillors Bailão, Bradford, Crawford, Fletcher, Matlow, Perks and Wong-Tam are all hosting virtual budget town halls and consultations. Councillors Ainslie, Carroll, Cressy, Layton and McKelvie have already held budget events. Social Planning Toronto and Progress Toronto have some upcoming budget events too. Check out our full listing of budget events. We're updating the list regularly with new event announcements.
- Check out Social Planning Toronto's latest in its City Budget Matters 101 Series! This week's release is on affordable housing. Read the full series here.
- Visit the People's Budget Platform, hosted by Social Planning Toronto!
- The City of Toronto has released a bunch of Budget Briefing Notes. These notes provide additional information about programs, services, infrastructure, and finance. All things budget related. Check out the latest here. Click on the Briefing Notes tab. There'll be more to come in the next week.
Next up in the budget process, the Budget Committee meets on February 4th for its final wrap up meeting, before passing the budget on to the Mayor's Executive Committee and City Council.