The city has backed away from an earlier plan to borrow money from the province in order to make up for the loss of housing funding, Mayor John Tory has announced.
Budget Chief Gary Crawford had previously told CP24 that the city was planning to borrow $129 million from Queen’s Park in order to spread out the impact created by the elimination of the Toronto Pooling Compensation fund in 2013, however Tory told reporters on Thursday that the city will instead rely on a “internal financing mechanism” to help overcome an $86 million shortfall in its 2015 budget created by the loss of the funding.
“After detailed examination of their proposal, which would require among other things the security of city-owned land and future provincial gas tax transfers put up as security, we have concluded that the city can do better on its own,” Tory said. “This approach may carry other costs. It may well mean that we will have to press pause on capital projects that can wait. Indeed there are going to be some difficult decisions in the years ahead.”
The mayor added that the service improvements announced for the TTC two weeks ago will stand as will the proposed 2.75 per cent property tax hike.
“I believe in my heart the right thing for us to be doing right now is exactly what we are doing, which is to take an approach that says we are going to be financially responsible, we are going to spread out the impact of these provincial cutbacks over a period of time and at the same time not gut services or increase taxes above the rate of inflation,” he said.
Deputy Mayor Denzil Minnan-Wong said that the terms the province was offering "weren’t really very good."
“At the end of the day we decided, you know what, ‘Thanks for nothing.’ We are not getting very much out of this deal. We are going to have to deal with this problem on our own. We were led to believe a number of weeks ago that they (the province) were going to help us out and quite frankly, that help just didn’t come and we are disappointed," he said.
"The money is going to come from something called capital from current which means we are going to take money which would normally, in this budget, go to capital. So that would be building things and fixing things. We are going to have to defer some of those projects."
Minnan-Wong told CP24 that he could not confirm which projects are "at risk" but said the details will be coming in the next couple of weeks.
In a written statement released Thursday afternoon, Ontario's finance minister Charles Sousa responded to the city's decision to turn down the loan.
"The province has worked diligently with the City of Toronto on an option for financial assistance which would have provided the City support in a way that did not have a fiscal impact on the province," he said.
"While we recognize the unique challenges of Ontario's largest city, any support must be consistent with Ontario's fiscal plan. We will continue to build on our strong partnership with the city and make progress in areas of shared provincial-city interest, such as transit."
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