After more than a decade of government inaction and half-measures, the City of Toronto and Province of Ontario have struck a deal that will substantially improve the City’s monumental financial troubles — an essential step toward creating a more livable, equitable, and sustainable city for all.

On November 27, the Province of Ontario and City of Toronto announced a ‘new deal’ that includes the uploading of responsibility for the Gardiner Expressway and Don Valley Parkway, substantial increases in provincial funding for critical public services and infrastructure (some with conditions requiring matching federal funds), and other provincial support to ease the City’s financial challenges.

In exchange, the City committed to meeting or exceeding the Province’s new housing targets (not a new commitment), agreed to “find efficiencies in service delivery and procurement” through process improvements, digitization, and consideration of shared services (approaches already underway), and accepted that “the province has the authority to advance project approvals for Ontario Place and intends to do so” (an acknowledgement that the law is not on the City’s side when it comes to stopping the Province from relocating Ontario Place to the waterfront). 

The new deal makes significant progress in addressing the City’s long-standing structural funding problems, but more work is needed to eliminate the 2024 budget shortfall and achieve a financially stable and sustainable city in the long term. Shortly after the deal was announced, Mayor Chow explained that the new deal reduces the 2024 shortfall but the City will still need an additional $600 to $700 million to fill the gap.

Highlights from the New Deal

The Province commits:

• to upload the Gardiner Expressway and Don Valley Parkway, subject to a “due diligence assessment” by a third party which would assess “all right-of-way, airspace, and underground ownership, legal, and corridor management controls.” While the assessment is underway, the Province will provide funding to the City for the continued maintenance of these regional expressways. The Province anticipates that the upload will save the City a minimum of $2 billion over 10 years and savings could exceed $6.5 billion once updated estimates and all costs are factored in. 
• $330 million in transit operating funding over three years to support new LRT lines, the Eglinton Crosstown and Finch West.
• $600 million for shelter operations and homelessness supports, if the federal government provides additional funding to support refugees and asylum seekers.
• $758 million for 55 new subway trains for the Bloor-Danforth line, if the federal and municipal governments each provide matching funding.
• $300 million in “one-time funding for subways and transit safety, recovery and sustainability,” including  increased police or safety officers on and near public transit, expansion of cell access and data services across the TTC network, and “enhanced emergency reporting options and response timelines for riders.”
• to provide up to $342 million if the City exceeds its housing target by 125% in each of the three calendar years.

The deal includes a commitment to examine further means to reduce City costs, such as provincial assistance with Toronto’s debt financing, and ongoing discussions to support the long-term financial sustainability of Toronto. 

The pressure is on for the federal government to come to the table with matching and related funding commitments and fairer funding arrangements for Toronto. The City’s 2024 budget launches on January 10, with a final budget vote set for February 14. Federal funding and additional provincial commitments can’t come soon enough. 

Check out:

• Government of Ontario, full terms of new deal
• Government of Ontario, media release
• Government of Ontario, Bill 154, New Deal for Toronto Act, 2023 (received Royal Assent on December 6, 2023)
• City of Toronto, media release
• Steve Munro, Transit and Politics, “Ontario and Toronto Make A Deal”

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