A funding shortfall to the mayor's SmartTrack plan could equal a 2.1 per cent tax hike, a new report out of city hall says.

The new numbers were in a report released Monday by City Manager Peter Wallace which detailed SmartTrack’s cost-sharing agreement between the province and the city.

The report summarizes and refines a number of funding commitments that were previously announced, but it also sheds light on what Mayor John Tory’s SmartTrack plan will cost Toronto residents.

Under the agreement, the city will be responsible for shouldering an estimated $3.3 billion to build six new SmartTrack stations and the Eglinton West LRT (the western portion of SmartTrack).

However the report predicts that the city’s share will be lower after further funds are secured from the federal government, the Greater Toronto Airports Authority, the City of Mississauga and developers.

The city plans to pay for its share of SmartTrack costs through development charges and tax incremental funding. However the report says that initial cash flow shortfalls in the early years could mean a hike in property taxes.

“Even if the full forecast incremental tax revenues are applied to repayment of the debt, a tax increase of 2.1% is projected to be necessary in order to fund the early shortfalls,” the report says.

Were the city to see half the projected revenue from tax incremental funding, the result would be a tax hike of about three per cent, the report says.

The report also says the city is exploring an alternative financing option that would only mean a tax increase of around one or two per cent, but that option could require a city guarantee or a legislative change.

Tory vows not to hike taxes

Tory’s office said in an email Monday that the mayor “has been clear he will not raise property taxes beyond the rate of inflation."

The email said the city measures costs by property tax points which is why the city manager included that figure in the report.

The mayor plans to explore a variety of ways to fill the funding hole, such as the city’s building fund, selling off city assets and federal funds. He is said to be expecting a report from staff in coming weeks on a variety of possible revenue tools and fees that could help pay for transit.

The report follows several months of negotiations that started between the city and the province in June to deal with expenses for the Eglinton Crosstown, SmartTrack and LRT lines planned for Eglinton West, Finch and Sheppard.

According to the report, the province has agreed to spend $3.7 billion to cover electrification of the GO network and additional track capacity to accommodate both SmartTrack and the province’s plan for regional express rail services. The province’s share would also cover the cost of upgrading 11 existing GO stations to accommodate SmartTrack and building two new regional express rail stations.

The city says the province will kick in 85 per cent of the cost of separated rail crossings that will need to be built, while the city will pick up 15 per cent of the cost.

When it comes to new LRT lines, the province will pay the full costs to build and maintain the infrastructure for the Finch and Sheppard lines, while the city will pay to operate the lines.

“This deal is a key step to introducing SmartTrack, which will add six new stations inside Toronto so our residents can enjoy the same fast, convenient commuter train service as those coming in from outside the city,” Tory said in a news release issued Monday.

Ontario Transportation Minister Steven Del Duca also praised the agreement.

“Both sides have had productive discussions, and we know the city’s priorities are in line with the priorities of the Government of Ontario,” Del Duca said.

The agreement will be considered at a special meeting of the city’s Executive Committee Tuesday. Mayor John Tory is expected to discuss the agreement with Premier Kathleen Wynne when the two meet tomorrow. It will finally go before a city council vote later in the month.