Cities need more help

Another year, another pandemic budget from the City of Toronto. This one — the third in a row — comes with a funding gap of more than $1 billion.

This is not where the city, or anyone who lives in it, wanted to be. As recently as November, city staff were tentatively preparing a “recovery budget” for 2022, charting a way forward to normality after a year and a half of struggling through the pandemic.

But that was before Omicron hit and set everything back. Now, the city manager makes no bones about the fact that this year’s draft is “still a COVID budget.” And along with that comes an all-too-familiar plea: senior governments must step forward and fill the gap.

Familiar, yes, but no less justified for that. The City of Toronto, along with other cities, has no choice but to turn to the province and the federal government for help. The alternative — gutting city services at a time when the need is greater than ever — is unthinkable.

We’ve gone through this dance a couple of times before, and as we pointed out last year we all know how it’s likely to turn out. Toronto and other cities will escalate their warnings about possible service cuts; then, sooner or later, the senior governments will step up and make up the revenue shortfalls brought on by COVID. Let’s make it sooner.

This time around, Toronto estimates the total impact of the pandemic at $1.4 billion. That includes both lower revenues, including some $560 million in lost transit fares, and extra expenses in such areas as public health, housing and shelters for those in the most desperate need.

The city says it has managed to identify $494 million in cost savings, “efficiencies” and additional sources of revenue. But its proposed operating budget of $14.99 billion still comes with an enormous, COVID-sized hole.

And that’s despite the biggest increase in property taxes for the past decade (though still at the rate of inflation). The city proposes to increase taxes by 2.9 per cent; along with a 1.5 per cent increase in the “city-building fund,” that works out to a total hike of 4.4 per cent, or $141 on the average property tax bill.

Frankly, it’s still peanuts. Toronto has kept property taxes very low, considerably lower than surrounding municipalities, for many years, and at a time of soaring house prices an average tax increase of $141 barely registers.

The real problem is that there’s a fundamental mismatch between the city’s responsibilities, which are wide-ranging, and its powers and “revenue tools.” Senior governments have access to sources like income and business taxes, which rise considerably when the economy rebounds. Cities are stuck with property taxes and user fees, which don’t.

That was true before anyone had ever heard of COVID-19, and it means Toronto has been skimping on basic services for many years. The pandemic just made the problem more obvious and forced senior governments to bail out the city in both 2020 and 2021, to the tune of $2.8 billion over those two years.

Those governments must step up once again this year. The city wants to make sure the transit system is ready for a return to real life while freezing TTC fares, add more paramedics, upgrade municipally run long-term care homes, and expand sidewalk snow clearing to all neighbourhoods. These aren’t frills, as anyone trying to get around in Monday’s blizzard can attest.

Senior governments have promised to support Canadians as long as the pandemic makes that necessary.

This third COVID year isn’t the time to let down Toronto and other cities facing big gaps in their budgets.

The real problem is that there’s a fundamental mismatch between the city’s duties, which are wide-ranging, and its powers and “revenue tools.” Cities are stuck with property taxes and user fees