Toronto’s city council approved the 2016 budget Wednesday with little debate or discussion.
The 2016 operating budget of $10.1 billion and the $21 billion 10-year capital budget includes a number of plans for transit, alleviation of traffic congestion, public safety, poverty reduction, and child care subsidies, among other things.
It is rare that council only takes one day to discuss and debate a budget in session — two days were scheduled for this item, with a possibility of a third.
Council addressed the issue of property and residential taxes before approving the budget itself, two items that are usually adopted together as a package. Deputy city manager, Giuliana Carbone, said the 2016 budget was a challenge. City staff had to balance instruction about keeping spending low while committing to a number of long-term capital projects.
“Those are not compatible,” he said.
Taxes are always a controversial topic — certain city councillors felt like the suggested overall tax increase of 0.88 per cent was too low, while others recommended the city not increase taxes at all. Instead, they suggested, the city should consider other forms of revenue.
Council eventually adopted the original recommendation, which included the following:
Property tax increase: 1.3 per cent
Non-residential tax increase: o.43 per cent
Overall tax increase: o.88 per cent
An additional 0.6 per cent was also added on for the development of the Scarborough subway and 0.78 per cent for residential properties, bringing the total tax increase to 2.69 per cent. The tax increase is well below the rate of inflation, and remains the lowest residential property taxes in the GTHA.
The budget greatly depends on municipal land transfer taxes. The city is making an assumption that the tax will not be reduced or softened — essentially that it will hold constant. If the municipal land transfer tax wavers, Toronto could be left with a large hole in the budget going forward.
“At this point, we are able to expand the service level in 2016. Going forward, unless we have an increase in land transfer tax, that clearly becomes unsustainable” said Peter Wallace, city manager for Toronto, to council Wednesday afternoon.
The budget itself includes $8 million geared towards poverty reduction, $5.5 million to support the Mayor’s Task Force on Community Housing, and funds to help with improved streetcar reliability, Sunday morning subway service, and the hiring of additional seasonal inspectors of municipal construction to alleviate traffic disruption. It also includes $1.25 million for child-care subsidies, which was not in the original recommendations.
At the end of the day, council didn’t really consider changing or altering the budget, which is why it only took a day to pass. Important projects like the Yonge Relief Line, SmartTrack, and the revitalization of Toronto Community Housing are not being funded this year, despite the city’s insistence of their priority status. The budget is a very political process, and the mayor couldn’t be seen supporting a tax increase that was higher then inflation, despite the blatantly obvious positive effects it would have, because a) the status of the City’s labour negotiations and b) it’s not popular for re-election.
Council’s decision to not match tax increases to inflation will, ultimately, come back to haunt them. If taxes don’t match up to the rate of inflation, there will always be debt. In fact, the gap will continue to grow. So, Toronto needs to make a decision. It won’t be long until the budget planning process happens all over again. Let’s not make the same mistake next year — as the city manager said, Toronto just can’t afford to.