Toronto’s city manager tabled a draft operating and capital budget for 2017 on Tuesday, including a two per cent property tax hike but a remaining budget gap of $91 million, and staff reductions totalling more than 400 positions.

For an average residential property in the city assessed at $587,471, the increase represents another $69 per year on the bill.

Revenue from the Municipal Land Transfer Tax is expected to grow 19 per cent over 2016, giving the city an additional $101 million. The recently announced TTC fare hike will bring in $29 million in 2017.

Assessment growth in the city is slated to bring in $67 million.

Toronto Mayor John Tory had previously said he did not want the residential property tax increase for 2017 to exceed the rate of inflation. Inflation in the City of Toronto ran at 1.9 per cent in 2016, according to Statistics Canada.

The proposed property tax hike is divided into a 1.5 per cent increase, plus 0.5 per cent as a “City Building Fund” levy, which expires after five years, which allows the city to increase its capacity to borrow for capital projects by another $1 billion.

"This budget has reduced our infrastructure backlog while keeping us within our debt limits," budget chief Gary Crawford told reporters Tuesday.

The budget also calls for the city to defer $72 million worth of capital spending and contributions to reserves for Toronto Community Housing, and draws $14 million from the TTC’s stabilization reserve.

To cover the $91 million shortfall, staff suggests harmonizing the Municipal Land Transfer Tax with its provincial equivalent, bringing in an additional $77 million, implementing a hotel tax, which could bring in $5 million, and cancelling the rebate on vacant property in the city, which could generate $11 million.

Crawford said the shortfall does not include a number of service enhancements that councillors and staff have pushed for in the past, including TTC improvements, poverty reduction measures and public health programs, totaling more than $9 million.

"If we decide those are priorities that have to go in (the budget) then yes our gap will get bigger."

But he said his priority is to find new spending cuts rather than new taxes or fees to cover the shortfall.

Coun. Janet Davis was less enthusiastic about plans to cover the $91 million shortfall.

“I’m not sure which magic wand Mayor Tory is going to pull out.”

She dismissed Tory’s answer of implementing road tolls on the DVP and Gardiner to pay for transit, as those funds would only start flowing in five or more years and would not be spent on operating costs.

“Right now we have the lowest (property) taxes in the province of Ontario, and it’s time to step up.”

Coun. Jon Burnside, who was just put on the city’s executive committee, told CP24 he doesn’t see council being able to cover the shortfall through spending cuts or asset sales.

“I don’t know that council has the appetite to impose service cuts, and nobody wants to sell Toronto Hydro.”

But he added the city should still look for efficiencies anywhere it can.

The budget still doesn’t include a way to pay for tens of billions in approved but unfunded capital repairs and new infrastructure.

“Notwithstanding $21 billion funded in 10-year capital plan, the city still has unmet capital needs of $33 billion over the next 15 years,” city staff writes.

But the capital plan does fully fund the flood protection of the Port Lands ($1.2 billion) and sets aside $3.8 billion for SmartTrack light rail transit.

The draft budget also calls for the city’s staff headcount to fall by the equivalent of 426 full-time positions over 2017.