Deputy Premier George Smitherman confirmed he is stepping away from one of the top political jobs in the province in the hopes Toronto's voters will elect him as their mayor next year.

"Had I chose to remain, I think I have a very good future here," Smitherman told a Monday news conference.

"But my city calls out. My city shows that it has a need to restore a sense of power to the office. And I think that I have the skills -- a combination of experience, passion, energy and roots in the city that make me well-suited to this challenge."

Gerry Phillips, MPP for Scarborough Agincourt, will take over the energy portfolio until the end of the legislative session. Smitherman will remain as MPP for Toronto Centre for the time being.

Smitherman said he will likely begin to focus on his campaign full time in March, when electioneering is legally allowed to start.

The veteran politician called himself "a son of this city" and said he has the leadership capabilities that Toronto needs to turn the city around.

"This city is facing tremendous challenges, challenges that threaten to limit our great potential. Toronto is in desperate need of strong leadership if it is to address these challenges and build an even stronger city," he said.

When he was asked what his plans are for tackling Toronto's massive budget shortfalls, Smitherman said he wants to take a close look at the city's books.

"One shouldn't pretend it's not the fiscal reality of this place (Queen's Park) and up in Ottawa as well," he said. "We have to recognize that the period of the next couple of years will be intensely challenging."

The times call for "innovative solutions" that don't necessarily include raising taxes, he said in response to a city councillor's recent suggestion to implement a Toronto Sales Tax to raise revenues.

If Smitherman succeeds in his bid, he would be Toronto's first openly gay mayor.

When he joined the Ontario legislature in 1999, he was Ontario's first openly gay MPP and then the province's first openly gay cabinet minister. Smitherman and his husband Christopher are trying to adopt a child.

Smitherman said he's always lived his life openly and is not about to change. "I never considered going back in the closet," he said.

Smitherman said his sexuality is always an issue in politics as some voters choose to either support or reject him because of it.

He called Toronto a "community of minorities" and said he often relates to the feelings associated with being a minority because he is gay.

The Tory factor

The Toronto-born MPP is the first major contender to announce his bid for mayor. A recent poll by the Globe and Mail found that former Progressive Conservative leader John Tory has the most support from voters at this point.

Tory has said he is seriously considering running for mayor. He ran against Toronto Mayor David Miller in 2003 but came in second.

The former politician did not comment on Smitherman's move -- nor did he answer whether he'll be seeking the job himself, only saying he's giving it "serious consideration" -- but invited his potential rival on his Newstalk 1010 radio show Monday afternoon.

 Tory told Smitherman that based on the messages he gets from listeners, the eHealth scandal will dog Smitherman when he makes the move to municipal politics.

Although Smitherman was never in charge of eHealth, he was health minister for the time that Smart Systems for Health Agency operated. In the recent auditor general's report, it was found that SSHA accounted for about $800 million in spending, but made little progress towards creating an electronic medical records system for the province.

"You asked me their questions with your own spin, sir," Smitherman retorted. "Each of us in public life has a track record. You have one that might have the potential to dog you as well."

Tory led the Tories to defeat in the 2007 provincial election and lost his own seat. He then failed to regain a seat in a subsequent byelection and then resigned as party leader. He has been replaced by Tim Hudak.

Tory did finish second to David Miller in the 2003 mayoral race. The 2010 race became much more wide-open when Miller announced he wouldn't be seeking re-election.

There was talk during the 39-day summer strike that a deal existed between Tory and Smitherman that would only see one of them take on Miller.

"That was an incorrect impression because there was no deal and Mr. Smitherman I'm sure will confirm that," Tory said. "We had discussions about the need for change and about the need for a clear choice when Mr. Miller was still there, but we didn't ever have a deal. There was no deal."

With sreport from CTV Toronto's Paul Bliss and Austin Delaney and files from The Canadian Press