The Future of Our City
Keeping Toronto Great
Toronto is Canada’s largest city and the fourth largest in North America. It is home to 2.8 million residents and nearly 90,000 businesses. We are a diverse, multi-cultural, creative city that stands tall among other major urban centres around the world. Toronto has been repeatedly ranked at the top of international studies and indexes for competitiveness, innovation and livability.
The City of Toronto invests in its residents and businesses – socially, economically, culturally, and environmentally – to make Toronto a desirable place to live, prosper, and visit. We strive to provide high quality and affordable services that respond to the needs of our communities.
City Council has adopted economic, social and environmental strategies that can lead Toronto forward. A Long-Term Financial Plan can help Council realize that vision.
Investing in Toronto’s Future
A Long-Term Financial Plan with well-articulated aspirations, clear priorities, multi-year expenditure and revenue targets, and effective planning processes will help us address key challenges and opportunities facing Toronto. To develop this plan, the City is asking for the public’s input and help in tackling some challenging questions about how the City can manage expenses, raise revenue, make the most of our assets, and manage its finances.
Before engaging the public, it is important that we ensure everyone is informed about the City’s primary challenge and its revenue framework. We encourage you to use the links below to learn more.
The City of Toronto’s Financial Challenge
Closing the Gap Between Costs and Revenue
As an organization, the City of Toronto works well and it will continue to work well. However, it has been challenging for the City to keep up with closing a persistent gap between expenses and revenues.
Each year, the costs required to keep delivering the same day-to-day services to residents and businesses increase by hundreds of millions of dollars – like police, transit and recreation programs, for example. Billions more are needed to build planned infrastructure like housing, parks and transit. Demand for services is increasing, and costs are rising faster than inflation. However, the revenue the City brings in every year is less than its costs.
Often, to balance the budget we have to defer big decisions, cut budgets, postpone investments, and use short-term bridging strategies, like borrowing from reserve funds. Balancing past budgets has also been possible thanks to things like growth in revenue from the Municipal Land Transfer Tax driven by the housing market and operating funding from other governments – both of which are not guaranteed sources of revenue in the future.
The gap between expenses and revenues is estimated to grow in the future. Many reports, studies and experts have commented on the City's continued financial challenges.
In short, we have a structural financial problem that needs a long-term solution.
The services delivered by the City and the amount spent to fund them continues to grow every year. Demand for services is increasing due to population and economic growth, costs of labour and supplies constantly rise, and we must maintain and improve our infrastructure. It costs more money every year to deliver the same services, and even more to expand programs and build new infrastructure.
The City has achieved significant savings through expense management strategies, and continues to look for savings and efficiencies. Despite this, current expense management strategies alone have not been enough to maintain existing services and programs.
It is important to recognize that the City performs a key role to deliver core businesses required by the Province – for example, policing, social assistance, child care, etc. In addition, a very significant portion of the City's budget pressures are driven by its agencies – for example, the TTC and Toronto Community Housing.
Existing expense management strategies alone have not been enough to maintain existing services and programs. To keep up, the City will likely require increased revenue. City Council has been very clear that it wants to invest in a large number of city-building initiatives. From building new parks and subways, to repairing the roads and buildings we already own. There are currently over $29 billion in approved but unfunded capital projects.
Property taxes have been rising below the rate of inflation. Toronto has low residential property taxes but high commercial and multi-residential (i.e., apartments) property taxes, when compared to other GTHA municipalities. In addition, the City is at its existing, Council-approved, borrowing limit and we are going deeper into debt every year.
There are options for increasing revenues, but each has its challenges. The City hired KPMG to undertake a study of potential revenue approaches. In addition, staff will be reporting to Council in December on revenue options.
We can no longer afford to kick the can down the road. The time has come to have a direct discussion around how to pay for the city we want to live in. The Long-Term Financial Plan will present a way forward to manage expenses, raise revenue, and make the most of our assets to invest in Toronto's future.
To be successful, the City’s Long-Term Financial Plan needs the support of the people of Toronto.
While the ultimate purpose of the Long-Term Financial Plan is to help achieve long-term financial sustainability, we must consider short-term decisions as well. The 2017 budget is the first year of the Long-Term Financial Plan and decisions in the 2017 budget process will impact the City’s persistent gap between expenses and revenues. Your input in the Long-Term Financial Plan consultations will help to pave a course for City finances.