City Manager’s report on finances sheds light on ‘tough decisions’ ahead: Tory
Mayor John Tory speaks at a news conference Monday May 16, 2016.
Joshua Freeman, CP24.com
Published Monday, May 16, 2016 7:05PM EDT
Mayor John Tory is sounding a warning about the city’s finances after reviewing a report from the city’s top bureaucrats that suggests Toronto could have a tougher time balancing its books going forward.
The report released Monday by City Manager Peter Wallace suggests that Toronto has benefited from some favourable financial circumstances in recent history that are not likely to continue. Those conditions include cost-shared social programs and deferrals of operating and capital expenses.
“The analysis strongly suggests that the positive circumstances of the recent past are unlikely to continue and, at the very least, cannot form the basis for responsible future fiscal planning,” the report says.
Speaking to reporters Monday, Tory said the report calls for an “honest discussion” about the city’s finances.
“I think it represents the single most honest look at the city’s finances in a long, long time. It challenges us and the people we represent to make some very important decisions,” he said.
Some departments may have to tighten belts
Tory said the analysis means that some city departments and agencies are going to have to do their share when it comes to keeping costs down.
“For example when asked to identify two per cent efficiencies in the last budget process, several of those asked simply said ‘no’ and made no submission,” Tory said. “That such a result could occur is in and of itself a significant problem.”
Tory said a proper discussion about handling city finances needs to include a conversation about contracting out some services, finding efficiencies and selling some public assets.
“We simply have to start having an honest discussion about the options that are in front of us – all of them – as a means of addressing the needs of building a city of the 21st century with proper public transportation, with adequate affordable housing,” he said. “We simply cannot do on a continuing basis what we have been doing. The same old way just won’t cut it anymore.”
City still grappling with historic debt payments
Tory cited two examples which he said have saddled the city with huge repayment costs.
The first is an account called “unfinanced capital,” a billion dollars’ worth of borrowed money that was spent over the years without a proper repayment plan. Tory said the amounts that were added to the account were never added to the declared debt of the city.
He said unapproved borrowing at Toronto Community Housing has also contributed to a huge debt load.
“I’ve also recently learned… that Toronto Community Housing borrowed hundreds of millions of dollars many years ago in connection with the Regent Park revitalizations,” Tory said. “It was never approved by city council and was not accompanied by a repayment plan of any kind. Now we’re beginning to set this right at a cost to taxpayers of $23 million per year.”
While Tory said the discovery of the debt presents the city with financial challenges, he was adamant that he would not ask homeowners to bear the costs in the form of property tax increases.
“For purposes of the annual operating budget, I will not support raising residential property taxes beyond the rate of inflation,” he said.
The report will be considered by the city’s executive committee when it meets on May 24. It calls for a series of reports to strengthen the city’s financial processes, strategic planning, decision-making and oversight.
City staff are also expected to report back to the executive committee on revenue tools in June.