CP24 - Toronto News | Breaking News Headlines | Weather, Traffic, Sports
Audit of city's books finds millions in efficiencies, deems capital plan ‘unaffordable’
RCAF aircraft fly past City Hall during a ceremony in which the Royal Canadian Air Force were presented with new ceremonial flags in Toronto on Friday, September 1, 2017. THE CANADIAN PRESS/Chris Young
Chris Fox, CP24.com
Published Wednesday, December 11, 2019 11:02AM EST
Last Updated Wednesday, December 11, 2019 12:41PM EST
The City of Toronto could face a $3 billion shortfall over the next three years as a result of an “ambitious” capital plan that it will struggle to pay for given current revenues, a new third-party review of its books has found.
The review of the city’s finances was undertaken by the firm Ernst & Young in the spring after the Ford government agreed to pay for financial audits for municipalities that were upset over his government’s decision to slash hundreds of millions of dollars in funding for everything from public health to child care.
The 49-page report, which will be considered by the city’s executive committee today, outlines a myriad of potential savings for the city.
The report, however, also identifies several grim fiscal challenges facing the city.
It says that in order to fully fund its capital plan over the next three years ($13.4 billion), the city will likely face a $1 billion annual shortfall.
While the report notes that the capital plan is based on a number of assumptions, including funding from other levels of government, it says that the $1.2 billion pegged to come from city surpluses between now and 2022 “will not be achieved.”
Furthermore, the report says that “recent historical performance levels” suggest the level of spending in the plan is simply “beyond the city’s capacity and unachievable.”
The report does say that the city could afford its capital plan if it deferred or cancelled some projects and reduced the total budget by 25 per cent but it conceded that doing so would “make it increasingly difficult for the city to build and maintain infrastructure and meet resident needs.”
“Taking the city’s operating budget separately, over the forecast period, the city will continue to balance its budget as it always has. The significant finding here, is that under current circumstances and assumptions–including maintenance of current service levels –the city’s capital plan is unaffordable,” the report states.
Reliance on efficiencies not sustainable
Speaking with reporters at city hall on Wednesday, Mayor John Tory pointed out that the city has found $891 million in efficiencies and budget reductions over the last five years but the report suggests that the city can’t keep funding an “increased demand in services driven by population growth” through budget reductions.
The report says that “transformational efforts to change the way the city operates” will in fact be the only path to fiscal sustainability over the next three years.
“In part, this is the result of continued pressure on city revenues including those introduced by recent provincial policy changes. But the challenge is more fundamental and requires a renewed effort to fiscal management, including changes to the way the city manages its budget,” the report says.
12 different opportunities for savings
The Ernst and Young report identified 12 different areas in which the city could achieve savings.
Tory said that some of the ideas, totally about $50 million in savings, will be implemented in the 2020 budget.
He said that other ideas will require further study and will be the subject of staff reviews that “will be undertaken immediately.”
“What we wanted to do for the purpose of the 2020 budget is be able take the things that are sort of self-evident, non-controversial and non-impacting on people and, such as procurement and contract compliance, and just do it,” he said.
Some of the other opportunities for efficiencies identified in the report include a call for the TTC and TCHC to aggressively pursue “non-fare and non-rent revenues, including through retail development opportunities” and a suggestion that the Toronto Parking Authority “create net-new parking spaces by extending on street parking enforcement to high-density residential streets.”
The report also says that the city could transfer the 52 child care centres that it operates to non-profit partners at an annual savings of $28 million.
"It is not something I sort of look at with great zeal to either save money or on principal but we will have them (staff) look at it as they are looking at many of these more complex recommendations,” Tory said of the idea.