Toronto staff propose 6.9 per cent tax bump, including city building levy

Toronto taxpayers could see their bills go up by a few hundred dollars a year on average as part of a new staff-proposed budget that would invest millions more in transit, housing and other services.

The budget, which was released at Toronto City Hall on Monday, includes a 5.4 per cent property tax hike in addition to the annual 1.5 per cent hike to the city building fund, which is a levy designed to help fund critical infrastructure projects. As a result, taxpayers would see their bills increase by 6.9 per cent or about $268.37 a year on the average home with an assessed value of $692,031.

Taxpayers will also see 3.75 per cent increases to water and garbage fees as part of the budget.

Mayor Olivia Chow says there is money in the budget to hire more first responders, expand food programs, and add more apartment inspectors to make sure rental units are in good condition.

“This proposed budget will mean change in Torontonians lives today,” Chow said.

The mayor announced last week that the latest TTC budget would freeze fares for a second year in a row. She also said the city would hire more traffic wardens to ease congestion.

$1.2B shortfall smaller than last year

Speaking alongside Chow Monday, Budget Chief Shelley Carroll said the proposed budget continues Toronto’s “journey toward fiscal sustainability” while strengthening core services.

Last year Torontonians saw a 9.5 per cent tax hike, including the city-building fund.

Carroll acknowledged Monday that it was an “extraordinary” ask from taxpayers last year that was needed to help bridge a $2 billion shortfall.

“I want to emphasize that that investment from ratepayers, paired with prudent financial stewardship, have allowed us to make meaningful progress,” Carroll said. “We were able to stabilize the financial foundation of the City of Toronto, so much so that we have increased our credit rating for the first time in decades.”

She said the extra cash from taxpayers, along with the new deal with the province that will see Ontario take back responsibility for the Gardiner Expressway and Don Valley Parkway, have brought the city closer to closing the gap. However she added that they haven’t entirely eliminated the fiscal challenges Toronto still faces.

“Toronto is still recovering from over a decade of underinvestment, which left us vulnerable to face the challenges we face today,” Carroll said. “And we now have ourselves starting with a $1.2 billion opening shortfall, an improvement, but still a challenge.”

Most of the pressure in the latest budget is the result of inflation and growth.

The proposed property tax increase comes after staff combed through departmental operations to find roughly $680 million in savings, Carroll said.

Speaking at the Budget Committee Monday, City Manager Paul Johnson noted that addressing the $1.2 billion shortfall through property taxes alone would have been equivalent to a 26 per cent property tax increase, or altogether eliminating the TTC as a service.

Johnson said the city remains on-track to shrink future budgetary shortfalls to more manageable levels as part of a multi-year financial plan, but has had to proceed carefully to avoid drastic service cuts.

“The service levels and that we provide to the people who live, work, play and learn in the City of Toronto continue to be at a level that people have seen in the past and in targeted areas, we’ve seen continued new investments,” Johnson said. “So this multi-year approach will require us to continue to work on our financial strategies, both on an operating and capital side. But we do see a time as early as 2027 where our opening pressure is much more in line with what we’ve seen in the past.”

He predicted that could like a $700 million shortfall as early as 2027, as opposed to the shortfalls in the billions the city has experienced since the COVID-19 pandemic.

By the numbers

Staff are proposing an operating budget of $18.8 billion. That’s $1.8 billion more than the 2024 operating budget. That increase reflects a rise in city expenditures of about $654 million. About $815 million of the shortfall, staff say, is accounted for by funds that are part of the city’s budget, but which flow from other levels of government.

Some of the increased spending in the budget includes more money for the TTC, emergency services and Toronto Community Housing. Additional spending also reflects higher staff costs due to union-negotiated collective agreements.

The proposed capital budget capital budget is $59.6 billion, stretching through 2034. It provides nearly $17 billion for transit, including $1.3 billion for new subway cars, $1.2 billion for eBuses and $500 million to overhaul ageing vehicles.

It also strongly emphasizes state-of-good-repair work, with $32.4 billion – more than half of the capital budget – going toward fixing crumbling infrastructure, like roads, bridges and community centres.

The capital plan also includes hundreds of millions of dollars for affordable housing, purpose-built rental units and Toronto Community Housing repairs.

Affordability ‘not the priority’: critics

While Chow touted the budget as improving people’s lives, some councillors slammed it as doing the opposite.

“Obviously affordability is not the priority of Mayor Chow and this administration, to introduce a tax rate that is triple the rate of inflation,” Coun. Brad Bradford told reporters. “Couple that with last year’s historic tax increase, you’re now looking at 16.4 per cent over two years. I think if you go out and ask Torontonians if the services have improved by 16 per cent they’re going to tell you absolutely not.”

He said he would have liked to see a budget that does more around congestion, crime and costs savings.

Speaking with reporters at city hall, Coun. Jon Burnside echoed the idea that people are not seeing an increase in service that they might expect to accompany tax increases.

“Torontonians, I don’t think, are going to be really happy because I don’t think they felt the commensurate increase in services,” Burnside said. “I don’t think anyone’s going around saying that ‘hey, Toronto has got so much better in the last two years that I’m willing to pay 17 per cent.’”

He said while he likes the mayor personally, he sees her priorities as “a little bit skewed” and added that “they haven’t shown that tough leadership that is needed in tough economic times.”

Following today’s presentation at committee, Chow will have an opportunity to hear input and make changes to the staff prepared budget before presenting her budget to council on Feb. 1.

Last year she revised a staff proposal to hike property taxes by nine percent, shaving off a point to bring the total increase to 9.5 per cent instead of 10.5 per cent. It’s not clear whether she might follow suit again this year.