Last month, Toronto City Council reviewed the updated Long-term Financial Plan, taking first steps to address the City’s serious financial woes and calling on the provincial and federal governments to pay their fair share and provide the City with new revenue tools that grow with the economy.

Toronto City Council is advocating for a better, fairer fiscal arrangement with senior orders of government, while also taking steps and looking more seriously at its existing powers and options to raise revenues on its own. With the election of Mayor Chow, there appears to be a new openness on Council to recognize the City’s revenue problem — that it lacks the resources it needs to fix what’s broken and build a better city — and take some steps to move the City forward. Continued community advocacy will be important to prioritize equity and reconciliation in all decisions on revenue, spending, and investment in critical programs, services, and infrastructure.

Highlights from the Long-term Financial Plan

In March, a Phase 1 report estimated that the City’s fiscal gap or financial shortfall over the next decade will total $46.5 billion — not including the full cost of climate action, poverty reduction, and other key strategies. Toronto has had a long-standing revenue problem, brought to crisis levels by the pandemic, inflation, and high borrowing costs.

The Phase 2 report, reviewed by the Executive Committee in August and City Council in September, recommends a long list of options to address the shortfall.

Major themes emerging from this latest report:

• The City’s financial situation is a crisis, requiring immediate action from Toronto City Council and the provincial and federal governments
• The consequences of inaction are immediate, affecting City programs, services, and infrastructure
• Toronto City Council can’t afford to waste another moment 
• There is no one solution to this problem; City staff have recommended a large number of measures to address the financial shortfall
• The City can’t fix this problem alone; even if Council adopts all of the recommendations in the Long-term Financial Plan, it will only cover 40% of the fiscal gap
• The Province and Feds need to pay their fair share and provide the City with revenue tools that grow with the economy

The Mayor and Council took some important steps forward at the September Council meeting, voting to:

• acknowledge the City’s long-term fiscal challenges and commit to taking a range of actions to address them
• increase the Municipal Land Transfer Tax (MLTT) rates for homes worth more than $3 million — a luxury homes / mansion tax advocated for by ACORN, Progress Toronto, Social Planning Toronto, Daily Bread Food Bank, and many other groups and residents across the city; funds will support the City’s capital plan for critical infrastructure; if the increased MLTT rates had been in effect between 2018-2022, the City estimates an additional $26.1 million, on average, would have been generated annually
• eliminate the $5 hourly cap on on-street parking fees and delegate authority to Toronto Parking Authority (TPA) to set the new fees, paving the way for TPA to increase rates to be more comparable with other GTA municipalities; City staff estimate an additional $12-15 million could be generated annually to fund and improve City services
• direct City staff to research and report back on several issues, including:
  • an update on the Vacant Home Tax and the prospect of increasing the tax from 1% to 3% of the assessed value of the vacant home; this tax is intended to get owners of vacant homes to sell or rent their properties; it also generates revenue through fees paid by owners who keep their properties vacant; at its October 11 meeting, Council voted in favour of increasing the tax to 3%; additional revenue generated from the increase to the vacant home tax will be allocated to the Multi-Unit Residential Acquisition (MURA) program to acquire affordable rental housing
  • an implementation plan for a commercial parking levy; this fee would be paid by non-residential commercial parking lot owners, raising as much as $490 million annually for public transit and climate action; it is anticipated that many lots would be exempt from the fee, e.g., parking lots in strip malls; Toronto Environmental Alliance and TTC Riders are campaigning for Council to adopt this significant revenue tool; Council hasn’t voted in favour of the levy yet, but is taking the next steps in a long-delayed process
  • taking a multi-year approach to recommending property taxes; consultants for the City found an additional $490-580 million could be raised annually by setting property tax rates on par with other large municipalities in the GTHA; all will be debated during the 2024 City budget process 
• direct City staff to advocate to and communicate with the federal and provincial governments on a range of fiscal issues, including negotiating:
  • a new municipal fiscal framework 
  • fairer transit and long-term care funding arrangements
  • new, significant revenue tools that grow with inflation; this includes a specific request that the Province provide the City with powers to implement its own municipal sales tax and/or a share of the existing HST

2024 City Budget

Meeting dates are out for the City of Toronto’s 2024 budget process:

• January 10: Budget Launch
• January 16-18: Budget Committee Reviews Budget 
• January 22-23: Budget Deputations/Public Hearings — Public Opportunity to Speak to Budget Committee 
• January 26: Budget Committee’s Budget Wrap-up Meeting
• February 14: City Council — Final Budget Vote

Resources

• Review the City staff presentation on the City’s Long-term Financial Plan
• Read the full staff report and supplementary report, as well as the detailed consultants’ report on the Long-term Financial Plan
• Check out Senior Researcher Beth Wilson’s video presentation and slideshow on the Long-term Financial Plan