The City of Toronto has saved hundreds of millions of dollars through a series of cuts but still faces a shortfall of $1.35 billion and may have to implement a series of “grim strategies” to balance its budget as early as later this summer, Mayor John Tory says.
The city had at one point said that it could face a shortfall of between $1.5 billion and $2.7 billion due to lost revenue and increased costs resulting from the pandemic but a staff report released on Tuesday paints a slightly rosier, though still incredibly alarming picture of its fiscal situation.
The 76-page report, which will be considered by the city’s executive committee next week, says that the financial pressures faced by the city by the end of 2020 will total $1.9 billion. The report, however, says that the city has already saved $188 million through various “mitigation strategies” and expects that number to increase to nearly $514 million by the end of the year, reducing the likely shortfall to $1.35 billion.
Some of the mitigation measures undertaken so far have included the placing of 1,008 full-time staff and 475 part-time staff on unpaid leave. The city also saved millions by electing not to hire more than 8,000 recreation workers whose services were not required due to pandemic-related programming reductions, according to the report.
At a press conference at city hall on Tuesday, Tory said that the much-awaited report lays clear the “stark reality” faced by the city and underscores the need for the provincial and federal governments to come to the table with emergency funding.
He said that staff have told him that in the absence of government funding, the city would either have to implement a “unacceptable” 60 per cent residential tax increase or make significant cuts to services, which could include the shuttering of subway lines and the laying off an estimated 19,000 city employees.
“You know we started talking about this in April and I understand the governments have been very busy helping other people but cities and towns are vitally important to the wellbeing of this country and to the wellbeing of its economic recovery and it is now time that this issue is addressed and addressed in a tangible way,” Tory said. “I don’t want to get in to speculating about what will happen if we don’t get that help but it will be a choice of only two things. One is service cuts and the other is tax increases because we don’t have other options to turn to.”
TTC faces $700 million shortfall
The report says that the TTC alone will face a nearly $700 million shortfall in its budget by the end of 2020, largely as a result of ridership losses that peaked at 86 per cent during the height of the pandemic and are expected to hover around 70 per cent this fall.
The report says that the city will also lose out on $249.2 million in budgeted Municipal Land Transfer Tax revenue as result of a decrease in real estate transactions that occurred during the early days of the pandemic.
Meanwhile, the report warns that the shortfall in the budget for Shelter, Support and Housing Administration could hit $185 million by year-end as a result of additional costs related to maintaining physical distancing in the shelter system, most notably the use of 17 hotels and seven community centres.
There are also dozens of smaller budgetary impacts, each totalling in the millions of dollars.
The Toronto Parking Authority budget will face a shortfall of $96.4 million by year-end, mostly due to a partial suspension of enforcement for some parking offences during the pandemic while Exhibition Place will see a shortfall of $26.2 million due to lost event and parking revenue and the Toronto Zoo will face a shortfall of $14.6 million. In the zoo’s case revenue will actually be down by $27.7 million due to a months-long closure but those losses are partially offset by a fundraising campaign and the launch of its “Scenic Safari” program ($6.7 million).
Other major contributions to the shortfall include a $11.4 million hole in the city’s IT budget as a result of expenses related to enabling city staff to telework during the pandemic and a $17.4 million hole in the city’s long-term care home budget related to the need for additional Personal Protective Equipment (PPE) and other protocols needed to battle the spread of COVID-19 within those facilities.
It should be noted that the city did realize some savings as a direct result of the pandemic – a surplus of $1.1 million is actually forecast for the economic development and culture budget due to cancelled events – but Tory said that the overall shortfall will still amount to 11.6 per cent of the entire operating budget.
He said that while other levels of government have repeatedly told him that “help is forthcoming”, it has not yet materialized. As a result he said that the city manager will be providing city council with a “candid” and “straightforward” report later this month that will outline precisely what they will need to cut to make up the shortfall on their own.
He said that those cuts would then have to be implement beginning later this summer.
“You don’t just cut the transit system by half and lay off thousands of people, which is a measure we have talked about. There is a process that has to be followed. I don’t want to go down that path but if we are forced to that is exactly what we will have to spend the latter part of the summer doing for implementation in the fall,” he warned.
The federal government has previously commitment to fast tracking $2.2 billion in already promised infrastructure money to municipalities to help them weather the COVID-19 pandemic but it has not agreed to any new funding at this point.
Queen’s Park, meanwhile, has given Ontario municipalities $150 million to increase shelter capacity during the pandemic but has largely deferred to the feds when it comes to the sort of large bailout proposed by Tory.
Speaking with reporters following an unrelated announcement in Cambridge on Tuesday afternoon, Premier Doug Ford said that he believes the provinces and the federal government are getting close to coming to an agreement on a deal that will help municipalities from coast to coast.
“We are very, very close to getting this deal by the way but if you asked me a week ago I wouldn’t have said we were all that close,” he said. “But we are a lot closer (now) and hopefully by the end of this week myself and other premiers will agree with the deal because it not just myself.”