Toronto – Toronto City Council approved the Updated Long Term Financial Plan and a series of actions to address Toronto’s unprecedented financial crisis. As detailed in the 2023 Financial Update and Outlook report to Council earlier this year, the City of Toronto is experiencing a significant immediate and long-term financial crisis: an estimated $1.5 billion starting pressure for the 2024 operating budget and an estimated $29.5 billion needed for the 10-year Capital Plan both of which are part of a $46.5 billion shortfall identified over the next 10 years.
However, even with the actions approved by Council, immediate and sustained support from the Government of Canada and the Province of Ontario is urgently needed. As a result, Council requested the Province of Ontario authorize new revenue tools that grow with the economy and reflect the scope and complexity of the fourth largest city in North America, such as a municipal sales tax on the purchase of goods and services in Toronto or a share of existing sales taxes.
In the absence of a new funding model or growth-related revenue tools, Council notified the Government of Canada and the Province of Ontario that the City will be forced to reduce essential service levels and cancel capital projects that benefit the region, province and country and contribute to shared priorities such as housing, transit, refugee response and climate action.
Toronto steps up
No single action will address the City’s immediate and long-term financial crisis. Council acknowledged the magnitude of the City’s financial crisis and approved to implement or explore multiple actions. These actions will enhance existing policy and revenue tools and introduce new ones, reduce capital expenditures, optimize asset management and improve budget planning and financial oversight.
As immediate first steps, Council directed staff to:
- Implement graduated Municipal Land Transfer Tax rates for high value residential properties valued at $3 million and above, for January 1, 2024
- Develop multi-year approach for property tax rates
- Remove on-street parking rate cap to enable a comprehensive rate review
- Report back on increasing the Vacant Home Tax rate from one to three per cent
- Request the TTC work with the City and the Toronto Arts Council to increase ridership.
In addition, Council requested staff reports for the introduction of the following new revenue and policy tools:
- A Foreign Buyer Land Transfer Tax
- A Commercial Parking Levy
- A dedicated 911 Next Generation levy
- An Emissions Performance Charge for buildings
- An additional land transfer tax on buyers of residential property where the purchaser owns more than one property within Toronto, with appropriate exemptions
Council also requested staff reports to explore reducing expenditures and forgone revenues, optimizing asset management and the feasibility of additional revenue tools:
- Restructure or dissolve the Imagination, Manufacturing, Innovation and Technology (IMIT) Financial Incentive Program
- Reduce or remove non-residential non-ground floor area development charge exemptions
- Review surplus and underutilized real estate assets to maximize greatest value and/or use
- A levy per passenger from Billy Bishop Toronto City Airport
- Graduated municipal property tax rates for high value residential properties and for properties that are not the owner’s primary residence
- A municipal lottery.
Previous City actions
Prior to today’s Council decisions, the City had already taken significant action to promote financial sustainability however current provincial legislation limits City revenue options almost exclusively to the taxation of property and its related uses. Actions previously taken include:
- Supported a 1.5 percent annual increase to the City Building Fund Levy for priority transit and housing projects (expected to generate a total of $5.3 billion over the next 10 years)
- Approved the largest residential property tax increase since amalgamation (5.5 per cent) for 2023
- Increased revenue, policy tools and user fees including the Municipal Accommodation Tax, Vacant Home Tax and TTC fares
- Leveraged sustainable debenture programs (Green and Social bonds)
- Reduced budget reliance on volatile funding sources such as the Municipal Land Transfer Tax
- Proactively managed the impacts of the pandemic, including implementing an effective COVID-19 backstop strategy and finding more than $2.5 billion in City savings, offsets and mitigation strategies
- Maintained a strong and stable credit rating.
These previous actions combined with today’s Council decisions are still not enough to address the 2024 Budget shortfall and City’s long-term financial crisis. The City faces real and urgent consequences starting next year if additional actions are not taken by the Government of Canada and the Province of Ontario.
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 actions within City authority, Council informed the Province of Ontario that:
- 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 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).
Council also requested the Province of Ontario upload the responsibility and costs associated with the continued construction and maintenance of the Frederick G. Gardiner Expressway and the Don Valley Parkway, including any future capital and operating costs.
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 and accompanying staff report is available on the City’s website. The Council meeting is available on the Toronto City Council Live YouTube channel 
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“The people of Toronto deserve a city where they can find affordable housing, rely on the TTC to get to work on time and access the programs that make life in our city better. Toronto is stepping up to meet our significant financial challenges and deliver the services people need. Despite the multiple actions approved by Council today we still need our partners – the Government of Canada and the Province of Ontario – to step up for the people of Toronto.” – Mayor Olivia Chow