The day of reckoning is the way a mild-mannered friend refers to the coming decisions about how Toronto City Council will, or will not, find the money to meet city expenditures in 2017 and thereafter.
The religious connotation of the phrase is not misplaced: for Mayor Tory and most members of city council, it is an article of faith that taxes should not — need not — be increased beyond the rate of inflation.
But Peter Wallace, the city’s chief executive officer, has said that the city ship of state will surely crash and sink unless that article of faith is undone.
Hoping to avoid this fate, city council recently decided that all city departments would be required to reduce expenditures in 2017 by 2.6 per cent; but the reduction in city services that cut would require is far beyond what the public would tolerate.
Half a dozen library branches closed down? A few dozen recreation programs cancelled? Even poorer public transit? Few members of council would survive the next election with those kinds of cuts.
And in any case, that decision, even if carried out, does not address the financial pressures. Wallace thinks almost $500 million more in cash is needed in 2017, $680 million in 2018, $775 million in 2019 and ever onward and upward. Then there’s the $29 billion in unmet capital obligations to keep the city’s infrastructure in reasonable repair, let alone build new facilities for the 30,000 new residents flooding into Toronto each year.
Reserve funds are low compared to the benchmarks used by other municipalities, so there’s no wiggle room there.
Mayor Tory says he has a plan, but he’s not yet willing to say what it is. In all likelihood he will be forced to do so later this month.
The City of Toronto Act outlines sources of revenue that the city is currently not using, but imposing them to their limit doesn’t produce enough revenue to address the city’s needs. Reinstating the vehicle registration tax, which council cancelled under Mayor Rob Ford in 2011, would be unlikely to generate more than $60 million a year. An alcohol tax would produce half that, as would a tax on tobacco or on amusements (films). A parking lot tax might generate $150 million.
Higher property taxes? Wallace points out that the average residential property tax in Toronto is $3,170 a year, whereas the average in the GTA is $4,180, but there’s no appetite among a majority on council to raise property taxes to be in the middle of the pack even if it would generate $400 million a year or more.
It seems the only way for Toronto to meet its financial obligations is to seek the legislative authority for the same kinds of tax tools successfully employed by other large cities in the world such as sales tax, employer payroll tax, income tax, corporate tax or road tolls. In short, council needs to stop pretending it is running a small rinky-dink government that will look after itself. Council needs to bite the bullet and realize its government must be well funded to provide first-rate levels of service.
It is hard to see that kind of leadership coming from Mayor John Tory. He has always been much too reticent about money. Just recently he announced plans for a large new city park over the railway tracks south of Front Street, adding that the city would only be able to proceed with the park if it could find the money, which he didn’t think would happen any time soon. Another grand plan for a different kind of city than the one he wants to lead.
The leadership needed for this issue should come from the business community, particularly those in the financial services sector, which is thriving from Toronto’s international reputation. A strong handful of those individuals can make the case for a robust and equitable new revenue tool — a sales tax is the mostly likely way to go — and in all likelihood they could help create the majority on city council that is needed to implement it.
The day of reckoning could then be the day when Toronto steps forth into a new and larger role in Canada, in North America and in the world, for our mutual betterment.
