Toronto – The City of Toronto’s updated Long Term Financial Plan and an accompanying staff report released today recommend actions for consideration at a special Executive Committee meeting on Thursday, August 24 and a subsequent meeting of Council. The Executive Committee agenda is available on the City’s website. As detailed in the 2023 Financial Update and Outlook report to Council earlier this year, the City is experiencing a significant immediate and long-term financial crisis: an estimated $1.5 billion starting pressure for the 2024 operating budget and $29.5 billion in capital needs, which both form part of a $46.5 billion shortfall over the next 10 years.
Even with the actions recommended by staff, immediate and sustained support from the Government of Canada and the Province of Ontario is needed to prevent significant tax increases, service level reductions and/or cancellation of capital projects that align with shared goals, including housing, transit and climate action.
The Executive Committee will hear speakers, ask questions of staff and consider the staff recommendations to enhance revenues, reduce capital expenditures, optimize asset management and improve budget planning and financial oversight. The Executive Committee’s recommendations will then be considered by Council.
City actions taken to date
The City has already taken significant action to promote financial sustainability but provincial legislation limits City revenue options almost exclusively to the taxation of property and its related uses.
Since the onset of the pandemic, the City has found more than $2.5 billion in savings, offsets and mitigation strategies. In 2023, Council introduced the largest residential property tax increase since amalgamation (5.5 per cent) and supported a 1.5 percent annual increase to the City Building Fund Levy for priority transit and housing projects, which is expected to generate a total of $5.3 billion over the next 10 years.
The City has also increased other taxes and fees, such as the Municipal Accommodation Tax and TTC fares, and has introduced a Vacant Homes Tax. However, these actions to date are not enough to address the 2024 Budget shortfall and beyond. The City faces real and urgent consequences starting next year if additional actions are not taken by the City, the Government of Canada and the Province of Ontario.
Toronto steps up
As an immediate first step, the Executive Committee will consider:
- Graduated Municipal Land Transfer Tax rates for high value residential properties valued at $3 million and above, for implementation January 1, 2024.
The Executive Committee will also consider directing staff to develop the following new revenue sources and financial measures and report back during the 2024 Budget process with implementation plans:
- A Foreign Buyer Municipal Land Transfer Tax on residential properties
- A commercial parking levy
- A 911 levy for Next Generation 911 costs
- A City-wide review, in conjunction with CreateTO, of underutilized real estate assets.
In addition to these actions, the Executive Committee will consider:
- Directing staff to develop a predictable multi-year approach for recommending property tax rates.
- Directing staff to analyze the feasibility of increasing the Vacant Home Tax rate from one to three per cent.
- Directing staff to provide options to restructure or dissolve the Imagination, Manufacturing, Innovation and Technology financial incentive program.
- Directing staff to take the necessary steps to remove the existing non-residential non-ground floor development charges exemption.
- Directing staff to report back on the feasibility of requiring existing buildings to annually submit building-level performance data and to meet specific greenhouse gas emissions performance standards.
- Removing existing on-street parking rate caps to enable the Toronto Parking Authority to complete a comprehensive rate review.
Property taxes cannot fund provincial and federal responsibilities
On an ongoing basis, the City delivers key services that are extensions of federal and provincial responsibilities, such as child care, long-term care, employment and social services, public health and refugee response. Approximately $1.1 billion, or 22 per cent, of the City’s annual property tax revenues reduce the financial burden for other orders of government and benefits the greater region.
Consequently, in addition to these proposed solutions within City authority, the Executive Committee will consider informing the Province of Ontario:
- Without a revised funding agreement, the City will be unable to implement the previously announced 978 new planned long-term care home beds.
- In the absence of a new funding model for the largest public transit system in Canada, the City will need to pause negotiations on Provincial Priority Transit Projects and future provincial transit expansion projects.
- Transit operation and maintenance funding is urgently required for Eglinton Crosstown (Line 5) and Finch West (Line 6).
Toronto is Canada’s economic engine but is not funded that way
While the Toronto region contributes to more than 20 per cent of Canada’s GDP and 53 per cent of Ontario’s, Toronto receives limited funding from the provincial and federal governments:
- The City expects funding of $2.7 billion from the Province of Ontario this year, representing just 1.3 per cent of the province’s annual spending, of which $2.3 billion is for programs delivered in partnership with the province such as child care, long-term care, employment and social services and Public Health).
- From the Government of Canada, the City expects $1.6 billion, just 0.3 per cent of their annual spending.
Left unchecked, the City’s financial challenges will result in reduced investments, job losses and reduced income taxes, which will have a negative ripple effect across the region, province and country.
To address this imbalance, the Executive Committee will consider requesting the Province of Ontario authorize new revenue tools, including those tied to economic growth, such as a municipal sales tax on the purchase of goods and services in Toronto.
In the absence of a new funding model, Executive Committee will consider informing the Government of Canada and the Province of Ontario that the City will be required to reduce essential service levels and cancel capital projects that benefit the region, province and country and contribute to priorities shared by all orders of government such as housing, transit, refugee response and climate action.
Torontonians encouraged to step-up and have their voices heard
Toronto residents are encouraged to participate in this process. Comments and feedback may be provided to Executive Committee in person, by video conference or in writing, and to Members of Council in writing.
The Executive Committee will hear from Toronto residents in person as well as by video conference during its meeting on Thursday, August 24. Speakers can register by email (exc@toronto.ca) or call 416-392-7033 by 4:30 p.m. on Wednesday, August 23. Written comments can be submitted to the Executive Committee by email: exc@toronto.ca 
or by mail: Attention Executive Committee, Toronto City Hall, 100 Queen St. W., 2nd floor, Toronto, ON M5H 2N2.
Comments can also be provided to Members of Council in writing. Council contact information is available from 311 or 416-338-0TTY (0889), or on the City’s Members of Council webpage . The gap between City revenues and expenditures was identified in 2016 and has been a significant part of each Budget cycle since. Related reports are available on the City’s Long Term Financial Plan webpage . The updated Long Term Financial Plan is available on the City’s website. The Executive Committee meeting will stream live on the Toronto City Council Live YouTube channel .
“Toronto is stepping up to meet our financial challenges and build a safe, caring and affordable city where everyone belongs. Torontonians deserve a city where they can rely on the TTC to get to work on time, where a young family can find housing they can afford, and where small businesses and communities can thrive. These targeted solutions are an important start, but we cannot do this alone. We need our partners – the Government of Canada and the Province of Ontario – to also meet this challenge and step up for people of Toronto, the region, province and country. Only by working together can we realize our shared goals on housing, transit, refugee response, climate and more.” – Mayor Olivia Chow