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Toronto faces an unprecedented budget gap of almost $1 billion in 2021 due to COVID-19


Toronto faces an unprecedented budget hole of almost $1 billion in 2021 as COVID-19 ravages revenues from transit and elsewhere, while costing the city hundreds of millions in unplanned services like temporary shelters.

The hole — seven per cent of the total $13.95-billion operating budget planned for this year — was spelled out at the city’s budget launch Thursday morning, one of the more sobering presentations in recent memory.

“This is a tough budget year,” said Mayor John Tory’s budget chief Coun. Gary Crawford at the start of the meeting — the first virtual budget launch in the city’s history.

“I don’t have to stress with what has happened over the last year that this will be probably our toughest budget season we have seen — or many of us have seen — in recent memory.”

The city is required by law to pass a balanced budget and cannot assume debt to pay for operating expenses.

The starting gap totalled $2.2 billion — an astronomical chasm never seen at city hall.

Staff started with finding $573 million in savings, such as a salary freeze for non-union staff, and increases in taxes and fees like residential property taxes.

That left them with a nearly $1.7-billion gap to resolve.

Most of that — $1.6 billion — is a result of money that is anticipated to be spent to address COVID-19, such as additional shelter space and public health measures, as well as fewer dollars coming into city coffers from sources like TTC fares.

City staff, in their initial budget proposal, assumed that gap would be entirely covered by the federal and provincial government, noting $740 million had already been secured.

An additional $76 million was included in the budget for costs related to refugees ($61 million) and supportive housing costs ($15 million), which is currently unfunded. It assumes full funding from the federal and provincial governments.

That leaves a gap of more than $900 million that relies entirely on other levels of government.

At the same time, citing the need to keep taxes “affordable” as a guiding principle of the budget, staff proposed a 0.70 per cent increase in residential property taxes — the smallest increase since Tory took office in 2014.

Combined with a 1.5 per cent increase already approved to fund the city building fund for housing and transit projects, the increase totalled 2.2 per cent or $69 added to this year’s tax bill for the average homeowner with a home assessed at $698,801.

The city faced a similar gap due to COVID-19 last year, but council was not aware of the impact the pandemic would have when it approved its budget early in 2020.

At that time, the city faced a $77-million budget hole to cover the cost of services to refugees. Council passed that budget with an outstanding request to the federal government for funding, which was eventually received.

Council’s chief budget critic, Coun. Gord Perks (Ward 4 Parkdale-High Park) warned Wednesday the city had made a bad negotiating move when Tory said the alternative to provincial and federal funding would be to make damaging cuts to the city’s capital budget — used to repair roads, build transit and other city-building initiatives like its climate change action plan.

“The thing about that strategy is we’ve already conceded,” Perks said in an interview, adding that falling even further behind on state-of-good-repair projects would be a “disaster.”

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The presentation Thursday outlined that the state-of-good-repair backlog — unfunded capital projects — would total $14.8 billion by 2030.

“It just means that the collapse is going to be that much bigger,” Perks said.

“This isn’t ‘building back better,’ this is not building back at all.”

Jennifer Pagliaro is a Toronto-based reporter covering city hall and municipal politics for the Star. Follow her on Twitter: @jpags





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