Toronto walks away from provincial loan to balance budget
Published Thursday, January 29, 2015 4:07PM EST
Last Updated Thursday, January 29, 2015 8:31PM EST
The City of Toronto has rejected a plan to borrow money from the province to help make up for an $86-million shortfall in Mayor John Tory's proposed municipal budget.
Tory made the announcement on Thursday, saying the terms of the $200-million line of credit were the reasons for walking away from the provincial relief.
"After detailed examination of their proposal, which would require among other things the security of city-owned land and future provincial gas tax transfers put up as security, we have concluded that the city can do better on its own," Tory told reporters.
The city will instead take out an $86-million bank loan that will have to be repaid with interest. Generating that same amount of money using property taxes would have required a 3.5 per cent increase on top of the 2.75 per cent Tory previously announced.
Tory said the bank loan to plug the $86-million hole was the preferred option over gutting municipal services or hiking the property tax to a total of 6.25 per cent
Some of Tory's critics, however, are warning that the bank loan is only delaying the inevitable, and taxes will eventually have to be raised.
"My advice to Mayor Tory is sure, it would have been great if you would have been able to deliver on a promise of tax increases at or below inflation, but now you can't," Coun. Gord Perks told reporters.
The city has not said how much it will cost tax payers to finance the new loan.
Tory says a number of capital project may also be affected following Thursday’s announcement.
"This approach may carry other costs. It may well mean that we will have to press pause on capital projects that can wait," he said. "Indeed, there are going to be some difficult decisions in the years ahead."
Last week, Tory announced that the city would use the line of credit to balance the city's books and deliver a budget that would provide improved municipal services.
Tory's administration were working out the details of that loan option prior to Thursday's surprise announcement.
With a report from CTV Toronto's Natalie Johnson