Mayor John Tory says that the “ad-hoc” way that provincial and federal governments fund municipalities like Toronto is “broken” and will need to be overhauled in order for the city to actually find a long-term solution to its fiscal challenges.

Toronto’s budget for 2023 includes a nearly $1 billion shortfall as a result of financial impacts from the COVID-19 pandemic that Tory has argued should be borne by higher levels of government.

In 2022 the provincial government did agree to fund one-third of Toronto’s approximately $700 million shortfall from COVID-19 but the federal government never came to the table as it did in previous years, forcing the city to delay hundreds of millions of dollars in capital work.

Now staff are using the same budgetary trick in 2023 but hoping that the result will be different.

Similarly, staff have balanced the budget on the basis of $97 million in assumed funding from other levels of government to cover the increased costs associated with housing refugees and $48 million in assumed funding to cover supportive housing costs. So far none of that funding has been promised.

“I have no idea why the federal government isn't leading the charge to say let's sit down together and work out a different way to have all cities, but starting with Toronto only because it's the biggest, be financed in a way that is sustainable as opposed to having to go with this kind of cap in hand routine each year,” Tory said during a press conference on Thursday. “I mean why am I spending my time now on refugees and on supportive housing money that's come every year? Why do I have to phone and write and email and show up and ask for that money to come again for this year, which still hasn't been confirmed? Why is that?

Tory said that the current system to fund municipalities “has been broken for a long time” and promised to spend much of his “remaining time in office” pushing for a new “financial arrangement for cities.”

The current arrangement, he said, is not only “not sustainable” but is “not even businesslike.”

“Unless they're willing to sit down and have a talk about how you can change that in some way, shape or form, then I think it's going to be the same challenge every year,” he said of Toronto’s finances.

City staff have said that they anticipate that the financial impacts from COVID-19 will continue in 2024 with preliminary estimates suggesting there could be a $900 million shortfall associated “with reduced transit ridership revenue and shelter services.”