Just a few months ago, in budget discussions with residents, most agreed that the City needed new sources of revenue to improve public transit, build affordable housing and create the liveable city we want to be part of.
Just a few months later, we’ll need that new revenue just to keep from going broke.
City government is not immune to the financial destruction caused by the virus. As Council was told yesterday at its first-ever online meeting, Toronto is losing an estimated $65 million per week. A best-case projection has spending topping revenue by $1.5 billion this year. If the current situation continues, into the summer and fall, the shortfall might be double that.
With ridership down 85%, the TTC is losing $20 million a week. As real estate sales decline, there’s far less revenue from land transfer tax. There’s also a City cost to deferring payments on property tax and utility bills for 60 days, which we did to help residents through difficult times.
Meanwhile, City costs associated with the virus continue to rise. For example, we are spending many millions of dollars more on protective equipment and additional shelter spaces and staff to combat the spread among the homeless population.
To put some of those numbers in perspective, a one percent residential tax increase across the entire city raises approximately $30 million. Obviously, digging out of a billion-dollar shortfall is not something the city could possibly do on its own. And unlike their federal and provincial counterparts, municipalities are forbidden by provincial law from running operating deficits.
The solution is not to seek permission to run deficits that, realistically, could not be paid off. Nor can we raise property taxes by the catastrophic amount it would take to pay off hundreds of millions of dollars in COVID debt.
The City is already reviewing both short and long-term spending. The TTC has announced plans to lay off 1,200 employees, with a drop in service while ridership remains low. But such measures need to be carefully monitored so that they do not lead to new health threats to passengers or drivers by creating crowded conditions on some routes.
In the near future, Toronto will need a commitment from both the federal and provincial governments to provide immediate direct funding to cover the cost of COVID-19. In the longer term, the city needs new and stable sources of revenue to fund our recovery.
I am mindful that this is May 1, a day when many will struggle to pay rent. While those with mortgages and apartment rents have mostly been given support to carry them through the next few months, some commercial tenants are facing eviction.
Please try to support our local restaurants and retailers through online delivery and pickup orders. We’ll have more on that in our next newsletter. In the meantime, if you have a favourite local business that we can support in this way, let us know about them.
The warm and sunny weather for this weekend will make us all want to leave the house. It’s good for the body and mind to go out for a walk or bike ride — but only if you continue to observe physical distancing. The last word on that subject comes from Doug Ford, featured in today’s music video. To watch, click here.