Mayor John Tory says he believes accepting a loan from the province in order to avoid slashing services and hiking property taxes further is “the right thing to do.”

Tory made the comment on Tuesday morning, one day after Budget Chair Gary Crawford revealed that the city is in the final stages of securing a $129 million line of credit from the province that will allow it to plug a hole in its budget created by the loss of provincial housing funding in 2013.

“It is a support mechanism that the province is extending to the city to allow us to cushion the blow of the withdrawal of funding by spreading it over the next few years and I think it is the right thing to do for the people of Toronto,” Tory said. “You will see the details when it comes out this week, but the cost of financing for households will be a couple of dollars over the life of the loan and what it will do is allow those very same households to experience increased investments in services and at the same time avoid huge tax increases.”

The Toronto Pooling Compensation fund attempted to offset the additional social housing costs faced by Ontario’s capital and when the program was eliminated two years ago it left the city with an $86 million hole in its budget.

Speaking with reporters at the unveiling of a Nelson Mandela commemorative stamp, Tory admitted that the city will have to “work hard” on finding a long-term fix to make up for the loss of funding but he said the loan will give it time to do so.

“I have indicated that we are about to embark on finding $80 million in additional efficiencies unrelated to this year’s budget,” he said. “I am determined to do that, I believe I have the skill service and experience to do that and that will help us with cushioning the blow.”

The proposed budget for 2015 includes an inflationary 2.75 per cent property tax increase, however Toy said that a more significant tax hike would be needed if the city does not accept the loan from the province.

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