The proposed city budget for 2018 includes more than $200 million in funding for capital repairs to crumbling Toronto Community Housing units, an injection of cash that officials say should help the TCHC stave off the closure of units.
Budget Chief Gary Crawford tabled the proposed tax-supported operating budget for 2018 as well as the preliminary capital budget for 2018-2027 at a meeting at city hall on Thursday.
The operating budget includes a 2.1 per cent property tax hike that would cost the average homeowner an extra $81 a year.
The capital budget includes $216 million for needed repairs to TCHC units in 2018 and another $63 million in 2019. That money will mean that the TCHC will not have to close any additional units over the next two years, as it had previously warned.
The capital budget also includes $486 million for the council-approved revitalization of the Seaton House shelter and the surrounding George Street neighbourhood.
Staff were able to find money for both TCHC repairs and the Seaton House project largely due to additional revenue from the provincial gas tax that was provided to municipalities after the Liberal government rejected Toronto’s request to place tolls on the Gardiner Expressway and the Don Valley Parkway last January.
In terms of the $10.97 billion operating budget, the largest expense continues to be the Toronto Police Service, however the total amount of funding given to the TPS ($999 million) is frozen from 2017.
The TTC, meanwhile, will receive a total subsidy of $713 million in 2018, which represents a $24 million increase from 2017. The TTC had asked for a $727.1 million subsidy in order to freeze fares and maintain current service levels.
In presenting the budget on Thursday morning, City Manage Peter Wallace noted that most departments and agencies were able to stick to a "zero per cent net increase" directive from council in May, something that he said he takes a "fundamental pride" in.
The total expenditures in the operating budget are up 2.9 per cent from 2017 while revenues are up three per cent.
Wallace said the budget maintains services, though he pointed out that service levels have not been adjusted to account for population growth.
“The notion of this budget is to be consistent with prior policy and prior direction and council has made it abundantly clear that they are not interested in reducing some areas of service despite earlier staff recommendations to undertake those savings,” Wallace said. “Last year when we did put reduction proposals on the table they were actually rejected by council.”
Budget balanced thanks to record land transfer tax revenue
There was an initial $510 million shortfall at the outset of the budget process; however that has since been eliminated.
The operating budget is balanced, in part, on the back of a red hot real estate market.
The city expects to receive $85 million in additional revenue from the municipal land transfer tax in 2018 and another $55 million in property tax revenue resulting from a growth in assessed values.
The 2.1 per cent property tax increase will also bring in an extra $61 million and a recently introduced tax on hotels and short term accommodations will bring in another $11 million.
It should be noted that the property increase adds up to a total of 2.89 per cent with the addition of a levy for Mayor John Tory’s city building fund.
Last year, council approved a budget that included a two per cent property tax hike, though several councillors pushed for a higher increase that would have allowed for additional spending on programs and services.
“The budget balances on the basis of the strength of land transfer tax,” Wallace said. “This does mean that we are putting recurring expenses against an increase that is potentially cyclical.”
Wallace told members of the budget committee that the city would not be “utterly without tools” in the event that land transfer tax revenues were to come in lower than expected, but he said that it is “important” that they recognize that the budget is only balanced on the basis of record land transfer tax revenue.
In a message posted to Twitter, Parkdale-High Park Coun. Gord Perks said the city is essentially making “ever increasing bets on the real estate market.”
“One day we will lose,” he wrote. “Losing can look awfully bad. Unlike federal and provincial governments we can't legally borrow to meet the day to day demands for service. If things go very bad very fast it will mean sudden, sharp service cuts.”
Some items remain unfunded
While the proposed operating budget is balanced, a number of previously announced items do not receive funding, meaning that their fate in 2018 will ultimately be up to city council.
Those items include a new two-hour transfer window on the TTC that was approved by the TTC’s board earlier this week. That program will cost $11.1 million to introduce in August, 2018, as proposed.
Meanwhile, the council-approved plan to lower TTC fares for low-income residents will also be at risk in 2018, unless council finds $421,000 in funding to hire six staff members who would be responsible for oversight and $4.8 million to launch the first phase of the program.
The budget also does not include money to hire special traffic wardens, which Mayor Tory has said could be used to reduce gridlock. That program needs $1.56 million in funding in 2018.
After today’s meeting, budget committee will meet another four times over the next two-and-a-half weeks to review specific aspects of the budget.
Public consultations on the proposed budgets will then be held from Jan. 8-10.
The budget will ultimately go to city council for final approval on Feb. 12.
