The City of Toronto is currently deliberating the operating budget which funds the services and programs that 2.6 million Torontonians depend on.  The 2010 operating budget faced a significant shortfall but was launched as a balanced budget.

Click HERE to view Councillor Pam McConnell’s presentation on the City’s budget.

Budget Highlights

The day-to-day operation of City services is paid from the City’s operating budget - the money dedicated to salaries and operating expenses such as rent, fuel, electricity and equipment. The delivery of City services such as police, fire, emergency medical services, TTC, employment services, the new 311 contact centre, libraries, parks and recreation, child care, by-law enforcement and many others are paid for through the City’s operating budget.

The proposed 2010 Operating Budget totals $9.2 billion and will be funded in various ways:

• Property Taxes – 39% ($3.6 billion)
• Provincial Transfers – 21% ($1.8 billion)
• User Fees – 15% ($1.4 billion)
• Other Revenues – 14% ($1.2 billion)
  • Toronto Hydro income
  • Toronto Parking Authority income
  • Court Services income
  • Enwave income
  • Rental of properties
  • Previous year surplus
• Reserves – 4% ($0.4 billion)
• Federal Transfers – 2% ($0.2 billion)
• MLTT/PVT – 2% ($0.2 billion)

The $3.6 billion in property taxes will fund the following:

• Emergency Services (Police, Fire, EMS) – 36%
• Provincially mandated services – 20%
• TTC and Transportation – 19%
• Municipal Services (libraries, recreation, parks, by-law enforcement, etc.) – 15%
• Principle and interest payments on capital projects – 11%

Budget highlights include

• $1.4 billion for the operation of the TTC, which provided more than 471 million rides in 2009.
• $285 million to maintain Toronto’s more than 5,000 km of roads, bridges and expressways.
• $956 million for Toronto’s Police Service -  more than 5,000 officers responded to more than 876,000 9-1-1 calls in 2008.
• $427 million for Toronto Fire and Emergency Medical Services  to maintain response times and provide life-saving help.
• $373 million to provide child care spaces to Toronto’s children. More than 940 child care centres and 21 home child care agencies provide 56,900 licensed child care spaces.
• $1.3 billion to support the City’s employment and social services
  • In 2010, the average number of social assistance cases at any given time is expected to be about 105,000, which includes both families and individuals. This estimate reflects the increasing numbers of people that will need assistance as the economy recovers.  In January, there were over 158,000 people in Toronto depending on Ontario Works.
• $220 million for the City’s Long-Term Care Homes and Services - 10 homes and more than 115,000 home-maker visits.
• $359 million to deliver more than 62,000 recreation programs

Toronto’s recommended operating budget also maintains important parts of Toronto’s Your City Can Help program announced in last year’s budget, to assist residents in keeping their housing and finding work. The proposed 2010 budget will extend the property tax assistance programs to increase the number of seniors and disabled persons eligible under the program. Details are included as part of the property tax bill.

Financial Pressures Faced in Building the Budget

As the budget was being assembled, the City faced significant financial pressures.  Unlike federal and provincial governments, municipalities are not allowed to run an operating deficit and must approve a balanced budget.  And unlike income taxes and sales taxes, property taxes do not grow with the economy.  For example, as a person’s income rises, the taxes paid rise without the tax rate going up.  However, property taxes received remain unchanged unless a municipality adjusts the rate.

Adding to the structural pressures, the City faces demands due to downloading of programs and costs by the Provincial government.  Although the Province has begun uploading some costs, the City still pays for some services through the property tax base that should be covered by the Provincial government.  Currently, the Toronto Police Service covers the cost of security in provincial courts, Children’s Services is filling the funding gap with the end of the Best Start subsidy, and property taxes are paying for funding shortfalls for Ontario Works and emergency shelters.

To address this shortfall, all departments were instructed to identify cost reductions and service efficiencies while protecting services as the City and its residents contend with the world-wide recession.

The City presented a balanced budget which was achieved by cutting costs, generating surplus from spending restraint, drawing on reserves, and increasing revenues.  While the proposed budget is balanced, it uses one-time solutions to address systemic operating budget shortfalls that could be, in large part, permanently addressed if the Province returned to shared funding for TTC operations.  The City has allocated $219 million from the prior year surplus to balance the budget and provide funding for the operations of the TTC.

Cost Cutting

Achieving a balanced budget and maintaining most service levels in 2010 has also required the City to take cost-cutting measures to ensure the funding is in place to pay for services.

In 2009, the City’s administration directed divisions to reduce expenses to produce a one-time surplus to off-set 2010 expenditures.  As a result, departments participated in a hiring slow-down, a service review process, and implementation of efficiencies that have made a balanced budget possible.

The City target was to reduce budgets by 10% over two years. Where possible, reductions have been recommended or implemented for 2010 and others will need to be considered as part of the 2011 budget process.

Some of the service level/budget changes proposed for 2010:

• reducing some administrative, human resources, policy, project and support staff
• eliminating in-person front counter service at front desks of City Hall and Civic Centres (kiosk and link to 3-1-1 will be provided).
• reassigning work to staff that may result in delays in service times within some areas.
• reducing overtime for Fire Services communications and marketing, fundraising and fire prevention units.
• reducing staff in by-law enforcement
• eliminating Saturday service at Toronto Courts and reducing hours during the week
• deferring facilities maintenance within Parks.
• maintaining the current 8cm threshold for snow removal during certain months
• reducing Council staff salary budget by $338,000, through deferral of hiring when positions become vacant.
• eliminating door-to-door pet licensing program
• reducing enforcement of the temporary sign by-law.
• reducing Sunday hours at 27 of the 99 library branches for five Sundays in the fall.

User Fees

User fees, while only making up about 15% of the City’s total budget, remain an important source of revenue for the City to offset the cost of providing programming and other services.  In many cases, such as recreation fees, the user fees only cover a portion of the cost.

The proposed budget includes user fee increases. For example, the fee for a 12-week adult aquatic pass is going up $6.30 - about 53 cents a week (from $186.67 to $192.97). In addition, to avoid service cuts that would severely disrupt or cancel programming, the budget also recommends introducing some new fees for services that currently have no cost-recovery such as recreation account administration, some gym rentals, family pass swim programs and nominal participant fees for some sports. The City has programs in place to help those who can’t afford recreation user fees.  A full list of all increases and any proposed new user fees is available at http://www.toronto.ca/budget2010.

Property Tax Increase

Toronto’s budget includes a residential property tax increase of 4% to maintain local services.  This increase is about $93 for the year for a home assessed at $407,374 (the average assessment in Toronto).   In 2009, residential property taxes in Toronto remained the lowest in the entire GTA, with home and condo owners in Toronto paying less in property taxes than any municipality in the 905 for a home of an equally assessed value.

As part of its support for local business and the phased realignment of business property taxes to levels competitive with those in the GTA, the increase in business property taxes will be held to 1.33%.  This is also the rate for multi-residential apartment buildings.

Toronto City Council will consider the final 2010 operating budget at its meeting scheduled for April 15 and 16.

For more information about the programs and services provided in the City’s 2010 proposed operating budget please visit the City’s budget web pages http://www.toronto.ca/budget2010.