Toronto's city council discussed whether to finalize a series of controversial budget cuts at a special meeting that drew thousands of protesters to the edge of Nathan Phillips Square.

Councillors sat down in City Hall's main chamber on Monday morning to kick off a service-cuts debate that's scheduled to last two days.

The list of proposed service cuts includes the closure of city-owned museums, barring the use of pay-duty police officers at construction sites, and ending the city's support for the Christmas fund for needy children. City theatres, farms and zoos are also on the chopping block.

"Right now, our financial foundation is crumbling. If we don't fix this financial foundation now, our dreams for the future will collapse," Ford said at the outset of the meeting.

"We're looking for permanent changes that will eliminate our structural deficit."

However, councillors are not discussing some of the more controversial proposed cuts -- to libraries, child care, public transit and snow removal services, for example. Ford confirmed last week that those proposed cuts are off the table for the time being.

City Manager Joe Pennachetti presented the lengthy list of money-saving measures to council last week. His proposal is based on the results of a controversial city service review conducted by consulting firm KPMG.

Ford told councillors that the projected shortfall is still $774 million. However, the city's chief financial officer, Cam Weldon, said the city's projected budget gap isn't precise because it was set in February, "based on some assumptions."

Pennachetti has suggested the gap may be as low as $500 million and on Monday, he said the city's budget committee may have an update on the projected budget gap "in about three weeks."

Councillors grilled the mayor at length about the shortfall and the proposed cuts.

"We do not have the information to make good decisions," said Councillor Joe Mihevc.

In with an interview with CP24 outside City Hall, Mihevc added that the mayor isn't considering "revenue opportunities" to help make ends meet. And he argued that City Hall should ask the province to cover the cost of services that were "dumped on" the city after amalgamation.

"We have to unite, all sides of council, and say to the province ‘it's time you start paying these bills again -- we can't do it any longer,'" he said.

Deputy Mayor Doug Holyday said city council can't wait for the revised projection on the budget shortfall to begin cutting services.

"I think we have to get on with some of these things," he told reporters. "We know there's a problem, it's just a question of how big is the problem."

Holyday also told CP24 that the city may need to hike taxes if cuts aren't made.

Halfway through a 20-hour debate on the proposed cuts last week, Ford told reporters the most he would raise taxes is 2.5 per cent next year.

"We're not going to sit back and throw up our hands and do what the previous governments have done and increase taxes and spend, spend, spend and tax, tax, tax," he said.

Council's list of proposed cuts has been met with much opposition, with many citizens arguing the service cuts are too severe.

Thousands protest

A coalition of community groups held a rally outside City Hall on Monday evening to protest the proposed budget cuts, which were describe by organizers as an "attack" on city services and jobs.

Thousands of people gathered along Queen Street at the edge of Nathan Phillips Square. One of the many placards in the crowd read "Stop the Crazy Train" -- a play on Ford's election motto -- and several people delivered speeches criticizing the proposed service cuts.

CUPE Local 416 president Mark Ferguson said his members have been invited to attend the protest.

"We hope that it's a good day for citizens of this city to have a voice in an administration that's just clearly not listening to them," he told CP24.

Rally supporter Sandy Hudson said despite Ford's confessions last week, Torontonians must continue pressuring council to lay off the cuts.

"The people spoke loudly and clearly last week. They will speak again on Monday, and again and again until city councillors get the message," Hudson said in a prepared release.