Budget banks on housing market

Preliminary plan banks on ‘risky’ strategy, leaves out key promises, critics say

Toronto city staff have presented, for the first time this term, a preliminary budget that is already balanced.

But that balancing act for 2018, council critics say, relies on a “risky” strategy of continuing to bank on a hot housing market while omitting $41.2-million worth of programs and services aimed at fighting climate change, tackling poverty and improving transit.

The nearly $11-billion operating budget is also balanced using a 2.1-per-cent residential property tax increase, which is the rate of inflation. Mayor John Tory has insisted on property tax increases that do not exceed the rate of inflation since his election in 2014.

“This is a good news budget,” Tory’s budget chief Councillor Gary Crawford told reporters after the budget launch Thursday. “It invests in key areas while keeping spending low and keeping tax increases also low.”

Crawford said he and Tory would back several items left on the chopping block for council’s choosing.

Critics of Tory’s administration on council noted the largely flatlined budget — that increases spending by less than 1 per cent — will provide fewer services in a growing city.

When staff began to prepare the budget, they were faced with a $510-million gap, which was closed before the budget was presented at a committee meeting Thursday.

It relies on increased revenues from the Municipal Land Transfer Tax, which is largely tied to home sales — $85 million more in 2018, following the trend in 2017.

“For the fourth consecutive year, we’re gambling on the real estate market and the bet we make every year gets bigger and bigger,” said Councillor Gord Perks, who has been critical of Tory’s administration. “This budget is incredibly risky.”

If the market softens mid-year, Perks said, council would be forced to consider immediate cuts to service.

Staff have also included $49 million in “bridging strategies,” one-time solutions to balance the budget that city manager Peter Wallace has warned against and once referred to as a way to “kick the can down the road.”

Those strategies include pulling $28 million out of reserve funds and not paying off $18 million in debt owed by Toronto Community Housing (TCH). The budget does find money for cash-strapped TCH to make repairs.

Those funds are provided by the city for 2018 through the capital budget in the absence of funding from other governments, meaning no TCH units will close prematurely in 2018. TCH is on track to close 600 units by the end of this year.

The budget as it exists now does not include several key promises from Tory and major policy decisions made in the last 11 months.

Crawford noted the budget is a lengthy process, with final council approval given in February, and that he and the mayor specifically supported the following items currently left out of the budget:

Time-based TTC transfers for Presto users ($11.1 million)

All initiatives under the poverty reduction strategy ($10.9 million)

Congestion-fighting measures including: Traffic wardens, permanent funding for “quick clear” squads and smart traffic technology (At least $2 million)

All Transform TO climate change action plan initiatives for 2018 ($2 million)

When asked why an anti-Black racism action plan ($995,400) and funds to support a newly approved Indigenous office ($519,700) were left out of the preliminary budget, Crawford said he and the mayor would also be supporting those two items.