News / Toronto

Mayor John Tory announces 2.75 per cent tax hike in first budget

Mayor John Tory launched his first budget Tuesday, including $86 million from the provincial government that he neglected to mention is a loan.

The proposed budget, if approved by council, will see property taxes increase 2.75 per cent, including a 0.5 per cent levy for the Scarborough Subway. That relatively low increase is made possible, in part, by $86 million of what Tory called “special provincial assistance.”

Tory announced the money Tuesday morning but said details would come next week. Hours later, Finance Minister Charles Sousa said the money was a loan the city would have pay back, with interest.

“When the city recently came to us with a request for financial support, we proposed to offer a line of credit for up to $200 million, secured by land holdings owned by the city,” Sousa said.

Tory didn’t immediately tell councillors or the public that the $86 million was a loan because he was “still in negotiations with the province and didn't want to preempt that process,” the mayor’s spokeswoman said.

Along with increased property taxes, the budget proposal includes a rise in fees for a variety of services, including garbage, some recreation programs and the TTC.

The budget contains $95 million in new TTC funding and nearly $75 million in other service improvements, “which is the largest investment in service improvements in recent history,” Tory said. “It is something the city needs, and it needs it now, but at the same time, the overall spending increase is kept below the rate of inflation.”

The budget contains nothing new for social housing, and the city continues to lean on upper levels of government for money to cover Toronto Community Housing building repairs.

The city forecasts $425 million in revenue from the municipal land transfer tax, but that is contingent on the continued strength of the housing market.

Chief financial officer Rob Rossini said he’s been “stunned” by the strength of Toronto’s housing market in recent years.

“I don’t think anyone could foresee the vibrancy Toronto’s real estate market is having,” he said.

Rossini acknowledged there are risks in relying on the land transfer tax.

If the housing market slows, the city may not receive the $40 million of the tax going to the capital budget and may have to delay capital projects. If the shortfall is larger, it will leave a hole in the operating budget.

Another area of risk is the police budget. Under the proposed budget, police wouldn’t get an increase, but officers’ salaries — which make up the lion’s share of spending — are still under negotiation.

After the budget is approved, Tory will be looking for additional cuts: 2 per cent across the board to departmental budgets at city hall.

The mayor blamed budget pressures and the dire need for investment in the TTC on his predecessor.

Rob Ford’s cuts were done with a meat cleaver and were akin to cutting off an arm and claiming you’ve lost weight, Tory said.

He added: “You don’t cut off a limb in order to lose weight.”