City Services Struggle Even With Tax Hike

by Markus O'Brien Fehr, Chief of Staff

In rolling out the 2022 City budget last week staff have called for a 4.4% property tax increase for residential properties. Though larger than recent increases, the amount of revenue proposed by staff still leaves Toronto in a precarious position that could see services continue to erode, even as our population continues to grow.

How do we end up paying more and always getting less? To start, the proposed increase includes a 1.5% City Building Levy brought in several years ago to generate badly needed funds to expand and maintain transit, as well as to create more affordable housing. The remaining 2.9% represents the current rate of inflation, meaning it's exactly the amount needed to pay for the same overall envelope of service the City provided last year.

But in some areas, the City needs to grow services. The 2022 budget proposes 62 new frontline paramedics, investment into shelters to provide physical distancing, more support for small businesses during pandemic recovery and investments into long term care and seniors services to ensure the highest possible service. All worthy expenses, but adding them within the same level of funding means squeezing other departments to make up the difference.

Impacts of the COVID pandemic also continue to be a huge factor. It is estimated that the gap resulting from lower transit use while maintaining service, higher public health costs, and additional shelter supports will amount to $1.4 billion in 2022. The City had created cost savings of almost $0.5 billion in 2021 to help cover this gap, but significant support still remains crucial from the Federal and Provincial governments to balance the books.

When members of the public make deputations to the budget committee next week, we'll be hearing about large numbers of programs that are being squeezed. Service levels for everyday services like tree pruning have been cut back. Response times for City bylaw complaints have gotten longer. There is no new money for rolling out additional road safety initiatives.

A major shortfall about which we hear shockingly little is the growing backlog of repair costs needed to keep our roads in shape. More than half of the City's roads were built between 1950 and 1980 and a large number are rated in poor condition. Even with a $4 billion investment over the next 10 years, road qualities will continue to deteriorate overall. It's expected by 2031, there will still be nearly $5.5 billion in unfunded but necessary repairs on both local and major roads.

We must constantly be looking for opportunities to deliver services with maximum efficiency, but significant cuts to services ultimately reduce our City's equity goals when they are most felt by those who are economically vulnerable. Because property taxes are based on property values which can fluctuate wildly between neighbourhoods, inequity also exists in the City's largest revenue tool.

People in Toronto deserve a realistic, long-term plan to ensure the stability of services and infrastructure. It will need to be creative, and call on all levels of government to make tough choices.