Mayor John Tory has endorsed a series of new revenue tools to fund transit, including a $2 road toll along the Gardiner Expressway and Don Valley Parkway and a mandatory hotel tax.

In a speech to the Toronto Region Board of Trade on Thursday, Tory touted the taxes as a way to help pay for approximately $33 billion in unfunded infrastructure projects, including SmartTrack, the Downtown Relief Line and the rerouting of the Gardiner Expressway.

Tory also used the same speech to reject the notion that the city could sell Toronto Hydro or introduce a parking levy to fund infrastructure.

The speech came following the release of a report by City Manager Peter Wallace that analyzed the possible benefits of a host of revenue tools, including road tolls and a tax on alcohol and tobacco.

“This is fair. This is transparent. And this will help us to build things we need,” Tory said. “We cannot keep squeezing services for a growing population from our property tax base alone and we cannot cut vital services that mean so much to people.”

The $2 road tolls would raise an estimated $166 million a year, though that number would go up to $272 million if a $3.90 toll was put into place. Meanwhile, the hotel tax would raise another $20 million.

In his report, Wallace said that once implemented the tolls would likely divert between 13 and 29 per cent of traffic off the highways with the “majority” of it ending up on the “surrounding road network. He said that in some cases that would mean “increased travel time and vehicle volumes” on local roads.

Commute times along the DVP and Gardiner would, however, be improved by two to eight minutes on average, Wallace said. Wallace also said that by introducing road tolls on the two expressways the city would effectively be “increasing its tax base,” something that Tory seized on while speaking with reporters following his speech.

“We know that 40 per cent of the people that use the roads I am proposing to toll are people who do not live in our city and do not pay taxes here,” he said. “To ask them to pay a small share of the cost of rebuilding and maintaining those roads, I think is a fair thing to do.”

Revenue would be put in separate fund

Tory said that the revenue generated from the new taxes would be combined with revenue from a one-per cent property tax levy that he has previously proposed and then put directly into a separate infrastructure fund that would be “overseen by an independent body and audited each year by the Auditor General.”

That money, he said, would ultimately allow the city to make the “most significant investment in transit and infrastructure in decades.”

Of course that investment could still be years away. Tory told reporters after his speech that the infrastructure needed to toll the DVP and Gardiner could take until 2019 to get in place.

In his report, Wallace also pointed out that there is a significant cost to road tolls. In fact, Wallace said that on average about 30 per cent of the revenue generated by tolled roads is eaten up by operating costs. Wallace estimated that the initial cost of tolling the Gardiner and DVP would be $100 to $150 million, assuming that an electronic camera-based tolling system is used, with annual operating costs of $50 to $70 million

“It is anticipated that over time these costs could be reduced as tolling technology evolves to become more automated. Nevertheless, the high overhead cost compares poorly with the marginal costs of increasing existing taxes,” Wallace wrote.

Budget chief says it is time for discussion on road tolls

Tory’s official endorsement of road tolls on Thursday afternoon came amid a city-wide discussion around the merits of the idea after several media outlets, including CP24, reported on Wednesday night that the announcement was coming.

Speaking with CP24 earlier on Thursday, the city’s budget chief said he believes it is past time for a “serious discussion” about road tolls.

“You have to look in the context of the city and the bigger picture,” Coun. Gary Crawford said. “Over the last many decades we have been underinvesting in our roads, in our transit and in our infrastructure. We can balance the books, we can manage the money, we can look for waste but it won’t be able to do what we need to do,” Crawford said. “We have a $30 billion infrastructure problem and that’s the reality. I think we now need to have a serious discussion with the residents of the city about road tolls.”

City Manager Peter Wallace first urged council to consider revenue tools as a way to pay infrastructure projects in May and reiterated that advice in his report released earlier today.

Among other things, Wallace’s report asks council to request that the province make legislative changes that would allow for the “collection of an alcohol tax at LCBO stores” in 2017 and give the city the “clear authority to require the collection of taxes by other “intermediaries” for “alcohol, tobacco and hotel and short-term rental accommodations.”

The report also raises the possibility of the city petitioning the province for the power to implement several other taxes in 2018 and beyond, including a municipal income tax and a parking tax.

“This is the price of progress,” Coun. Joe Mihevc told CP24 earlier on Thursday, when asked about the road toll proposal. “I am so pleasantly surprised and delighted that the mayor has come out with this idea and I think it will win at council. If we want to fix up our road system, if we want to build the public transit system that all of us know we need, if we want that; than this is the bill.”

Tory has been opposed to road tolls in the past, telling reporters last September that he doesn’t believe it is “the fairest approach to ask people to pay tolls for roads they have already paid for.”

During an unsuccessful mayoral campaign in 2003, Tory also reportedly likened road tolls to “highway robbery.”

In a message posted to Twitter on Thursday, though, Chief Planner Jennifer Keesmaat said that road tolls are good public policy because they “influence behavior” and will eventually reduce congestion.

Keesmaat also said that road tolls help account for the fact that road use is “subsidized much more heavily than transit.”

“Transit riders pay, every trip. So despite the negative + high environmental impacts/costs of driving, the privilege, today, goes to drivers,” she said.

Mammoliti launches campaign against new taxes

While there appears to be some support for the idea of road tolls, there is also likely to be plenty of opposition.

The Canadian Taxpayers Federation sent out a news release early Thursday morning, suggesting that the tolls would "cause gridlock on surrounding streets" and urging residents to sign an online petition.

"Commuting to work isn’t a luxury – most people who commute do so because they can’t afford to live in Toronto because of government policies like the double-land transfer tax," the release said.

In addition to the CTF, several councillors have also vowed to vote against any motion to toll city roads, including Coun. Michael Ford and Coun. Giorgio Mammoliti.

Ford told CP24 that the underlying issue faced by the city is a spending problem rather than a revenue problem.

“We are committing to projects that we cannot fund. I think we have to slow down on that and then look at other sources for revenue,” he said.

For his part Mammoliti put out a press release, accusing Tory of having an “underhanded” approach to introducing new taxes as a way to pay for a “never ending spending agenda.”

Mammoliti also released a caricature-style poster n Thursday in which he is seen punching Tory in the gut in a boxing ring with the headline “Punch Out Mayor Tory Taxes!” in bold print above the scene. Mammoliti says the poster will be part of a campaign against new taxes that will also include bumper stickers, fridge magnets and an online petition.

“Many of these new taxes punish people who work, own homes or drive cars,” Mammoliti said in the press release. “While residents don't mind paying their fair share to fund core city services, they are fed up with having to pay for the never ending spending agenda that Mayor Tory has bought into.”

Province would have to sign off on road tolls

In order to introduce road tolls, the city would first have to receive the backing of the provincial government as an amendment would have to be made to the City of Toronto act. The provincial legislation currently states that the city "does not have the power to designate, operate and maintain a highway as a toll highway," unless a regulation is made under the act.

Transportation Minister Steven Del Duca was asked on Thursday whether his government would support road tolls in Toronto but said it’s too early to say.

Progressive Conservative party leader Patrick Brown, however, told CP24 that he "certainly wouldn't support" the introduction of road tolls on the DVP and Gardiner.

"I think Ontario is becoming less and less affordable and this would make it worse. I hope Kathleen Wynne has not given the City of Toronto secret permission to go out and do this," he said.