Toronto formally started the process of setting its 2021 budget on Thursday as the city contends with an unprecedented challenge to its finances wrought by the COVID-19 pandemic.
The proposed operating budget — set at $13.95 billion — features a gap of nearly $1 billion, which the city expects to be plugged by additional funding from the federal and provincial governments.
However, that money has not yet been confirmed even with the budget process now officially underway.
“This will be probably our toughest budget season we have seen,” said Gary Crawford, chair of the city’s Budget Committee.
Despite that looming uncertainty, the proposed budget does not call for any service cuts or tax hikes, which officials had previously warned would be possible given the financial damage caused by the pandemic.
The budget calls for a 0.7 per cent residential property tax increase, which is pegged to the rate of inflation. Homeowners will also be charged an additional 1.5 per cent next year for the City Building Fund, which is dedicated to transit and housing infrastructure.
The tax increases will amount to an additional $69 annually for the typical Toronto home, valued at just under $700,000.
‘Not the time’ to make cuts, says mayor
“I firmly believe now is not the time to be cutting services, and that individuals cannot afford significant tax increases to cover our shortfall,” said Mayor John Tory in a statement.
My statement on the 2021 City of Toronto budget launch. (1/2) <a href=”https://t.co/J6ukuBwfPI”>pic.twitter.com/J6ukuBwfPI</a>
Tory repeated his call for higher levels of government to quickly move ahead with a second round of emergency funding to help Toronto recover from its financial crisis.
“My work to secure a Safe Restart 2.0 agreement is underway and I am confident that we will be successful in bringing all governments to the table to renew and extend this partnership for Toronto and all cities across Canada,” he added.
2021’s shortfall, by the numbers
All told, the city is projecting $2.2 billion in budget pressures during the 2021 fiscal year, of which about $1.6 billion is attributable to the effects of the pandemic.
Revenue from sources such as TTC fares have plummeted since last spring, while the city has also increased spending in areas such as shelter services and the hiring of additional long-term care workers.
While the city says assistance from the federal and provincial governments will be required to cover part of the shortfall, so far, only $740 million has been confirmed, leaving a hole of more than $900 million in needed funding.
Toronto expects to make up about $573 million of the $2.2 billion gap through various mitigation strategies, savings and efficiencies.
By law, Ontario’s municipal governments are not permitted to run deficit budgets, meaning the shortfall will have to be covered in some fashion before city council debates the budget on Feb. 18.