Ontario government agrees to cover one-third of Toronto’s budget shortfall

The Ontario government has agreed to cover one-third of Toronto’s budget shortfall, while also promising to compensate for revenue losses because of the province’s new housing bill – a partial win for Mayor John Tory that cuts the 2022 funding gap to under half a billion dollars.

The pledge by Queen’s Park comes after weeks of meetings and public advocacy by the mayor, who is also hoping for money from Ottawa. By law, the city cannot end the calendar year with an unbalanced operating budget.

Such a contribution from the province would reduce Toronto’s 2022 budget gap to about $470-million. If the city doesn’t receive more funding, it plans to cover the shortfall by deferring capital spending.

“I will give the province full commendation, they have gone first and put some serious money on the table,” Mr. Tory told reporters. “And I would only hope that the government of Canada, who have been very good partners to the city of Toronto during my time here, will recognize that a strong and abiding economic recovery for the city of Toronto will depend on helping us with these entirely COVID-related costs.”

Toronto could face ‘extreme’ service cuts, tax hikes without financial aid, Mayor John Tory says

A spokeswoman for Deputy Prime Minister Chrystia Freeland reiterated a government statement from earlier in the week that noted past support to municipalities while not offering any new money.

Queen’s Park has also agreed to pay the city of Toronto for money it loses because of Bill 23 – a piece of housing legislation, which was signed into law this week, that waives some development charges to spur construction. Development charges are levied on home construction to pay for roads, sewers, parks, transit and other urban infrastructure.

Toronto city staff estimate the revenue loss because of the drop in development charges would be about $200-million a year. According to a letter to Mr. Tory from Municipal Affairs and Housing Minister Steve Clark, released publicly, the province will ensure that the city “is made whole” if there is any Bill 23-related impact to building housing-related infrastructure and services.

First, though, the province wants an independent audit of municipal finances, focused on reserve funds and development charge administration.

Mr. Tory said he welcomed this scrutiny, though he also said he needs more clarity on exactly what is being promised around replacing revenue from development charges.

“Development charge reserves are governed by strict rules,” the mayor said. “These reserves are not some kind of piggy bank or a chequebook. They represent sound financial management and good planning.”

Mr. Clark said at the legislature that municipal development charges had “skyrocketed” out of control and needed to be contained to get homes built.

“These mayors who speak against our bill have one message,” he said. “They’re saying to that young family, ‘Stay in your parents’ basement. You are never going to have a home that meets your needs.’”

Also Wednesday, Mr. Clark denied tipping off developers to the government’s plan to remove 15 parcels of land from the Greenbelt for development, a day after he refused to address allegations levelled by opposition MPPs in the legislature or answer questions about it from reporters.

A Globe and Mail investigation showed that at least 10 Greenbelt properties now earmarked for potential development changed hands since Doug Ford was first elected premier, one of them selling for $80-million just weeks before the government revealed its new plan. At least four developers who bought the properties the government is now proposing to remove from the Greenbelt have either donated to the PC Party, hired Conservative lobbyists or both.

Asked by opposition MPPs and reporters on Tuesday, Mr. Clark didn’t answer directly whether any member of the government or Progressive Conservative Party gave developers a heads-up about the plans. On Wednesday, the minister offered an emphatic “no” when asked the same question in the legislature.

With a report from Dustin Cook