Toronto’s proposed budget for 2022 includes the largest residential tax hike of Mayor John Tory’s tenure as the city faces significant pressure from both rising inflation and the COVID-19 pandemic.

The nearly $15 billion operating budget was tabled during a meeting of Toronto’s budget committee on Thursday morning.

It includes a 2.9 per cent residential tax increase, as well as a 1.5 per cent increase to the city building levy that was approved back in 2019.

Staff say that as a result of the combined 4.4 per cent tax increase the owner of an average home assessed at $697,185 will pay an additional $141 in 2022. The property tax bill for an average priced home would total $3,339.

The proposed tax rate represents a significant increase from 2021 when the city was able to limit the hike to 0.7 per cent, which was the lowest of Mayor John Tory’s tenure.

But since then inflation has hit an 18-year high, as supply chain disruptions brought about by the pandemic have exerted upward pressures on prices.

Staff say that in drafting this year’s budget they faced an opening shortfall of $583 million strictly as a result of inflation and growth.

They say that pressure then rose to $2 billion once the projected 2022 impacts from the COVID-19 pandemic were factored in.

The budget, as proposed, is balanced on the basis of approximately $1.4 billion in funding from the federal and provincial governments to cover costs related to the pandemic.

That money, however, has not yet been secured.

Staff say that they are also expecting $1.3 to $1.7 billion in financial pressures related to the pandemic in 2023, as COVID-19 and an expected shift to remote work continues to wreak havoc on the city’s finances, particularly when it comes to the TTC.

Looking beyond the next few years, staff say that they anticipate that the city will require $500 million to a $1 billion in “ongoing funding” from the other levels of government to ensure the city’s recovery post-pandemic.

“Make no mistake the 2022 budget is still a COVID budget and we know as much as this year will be a challenge the revenues aren’t going to spring back and the costs aren’t going to disappear next year and the year after,” City Manager Chris Murray said during Thursday’s meeting. “So there is a challenge in front of us for this year’s budget but this is not going away.”

Property taxes

Nearly $200 million in costs attributed to Omicron

Staff say that nearly $200 million of the financial pressures related to the pandemic are specifically due to the emergence of the Omicron variant.

They say that the single biggest impact is on the TTC, which will face $561 million in COVID-19 pressures in 2022 largely due to lower ridership levels.

But the cost of administering the city’s shelter system is also up $288 million when compared to before the pandemic, mostly due to the need to secure additional facilities in order to allow for physical distancing.

The budget being proposed by staff includes $135 million in new investments, including money to hire 63 additional paramedics, restore TTC service to pre-pandemic levels and expand sidewalk clearing across the city.

In a statement issued on Thursday morning, Tory said that he has maintained “a keen focus on sound management of the city's finances throughout the pandemic” and believes that the budget is a “responsible” one, given the fiscal challenges the city is facing.

He said that ”over the coming weeks” he will be continuing his advocacy with the other levels of government “to ensure we protect frontline services and continue to make needed investments in major capital infrastructure projects."

Murray, however, said on Thursday morning that there are no guarantees that the federal and provincial government will provide emergency funding to help the city offset hundreds of millions in costs related to the pandemic, as they did in 2020 and 2021.

“I don’t have a cheque in hand,” he said.

Public consultations on the budget will take place on January 24 and 25. It will then go to city council as a whole for final approval on Feb. 17.