Mayor John Tory pitches substantial property tax increase to fund transit and housing projects

Mayor John Tory pitches substantial property tax increase to fund transit and housing projects

Mayor John Tory is making the most significant financial move of his mayoralty, pitching to substantially increase property taxes to help fund a massive backlog of transit repairs and affordable housing, the Star has learned.

In a speech Wednesday morning at a Canadian Club breakfast in downtown Toronto, Tory is expected to make the case for increasing an established special levy on all property taxes, called the city building fund, that would see that levy increased to a cumulative 10.5 per cent over nine years rather than the currently planned 2.5 per cent over five years.

The levy, which was approved by council in 2017 at Tory’s urging — what was then a departure for a mayor who has insisted on keeping property taxes low — is dedicated to funding affordable housing and transit capital infrastructure projects.

Council already approved a plan to increase the city building fund by 0.5 per cent every year until 2021, when it would max out at 2.5 per cent.

Tory now wants to introduce a motion at the upcoming council meeting later this month that, if approved, would see an additional 1 per cent increase in 2020, an additional 1 per cent increase in 2021 and an ongoing 1.5 per cent increase through 2025 for a cumulative 10.5% tax once the increases are fully implemented — adding 8 per cent over the original council-approved plan, a source with knowledge of the proposal who spoke under the condition of anonymity ahead of the announcement confirmed to the Star.

A 1.5 per cent increase would cost the average homeowner an additional $43 a year, according to the source, or fewer than 12 cents per day.

That levy on home and business owners, under Tory’s plan, would give the city the ability to support $6.6 billion in recoverable debt, which the city could start borrowing now to put towards immediate transit and housing needs, the source said.

“What we are hearing from our professional city staff is that despite our continuing efforts to run an efficient and responsible government, we need to do more to make sure we are actually building up our city,” Tory is expected to say, according to a copy of his prepared remarks obtained by the Star.

The speech outlines that an anticipated review of the city’s services by outside firm Ernst and Young, also to be released Wednesday, has found “millions” of dollars in efficiencies, but that even if those savings are realized it won’t help the city tackle its most pressing problems.

“We are saving millions a year but we still need billions to build for the future and to invest in maintaining what we have built so far,” Tory’s written speech says. “And I will not as Mayor carry on the old practice of just postponing these investments, sometimes indefinitely.”

The move comes amid a decade of austerity measures that have included tax freezes that were effectively cuts when inflation is considered and saw the city spend less and less per person as residents felt the squeeze of services in a booming Toronto — a situation perpetuated by former mayor Rob Ford’s government and then Tory’s even as successive city managers rung alarm bells about the city being on the edge of a financial cliff.

Though Tory has consistently promised to keep property taxes at or below the rate of inflation, including as part of repeated criticism of mayoral challenger Jennifer Keesmaat during the 2018 campaign, with the city building fund considered, that promise has not been met. Homeowners, under this plan, would continue to see above-inflation increases.

Tory’s latest move also comes after he and a majority of councillors rejected a request by Coun. Mike Layton (Ward 11 University-Rosedale) this October to get a report during the 2020 budget process on how a one per cent increase to the city building fund would help accelerate TTC capital plans.

The new funds Tory proposes raising now, which requires council’s approval, could help make a dent but not cover the $24 billion in unfunded TTC state-of-good repair projects which are needed just to maintain current levels of service.

In his speech, Tory will say the funds would help invest in new subway cars, streetcars, signal systems and station upgrades as well as meeting his own campaign target of building 40,000 new affordable housing units over the next decade.

City staff, in a report released Tuesday, are recommending council ask the federal and provincial governments for financial help with the housing goal, saying their investment is needed to fund half the affordable units.

Tory plans to say the city cannot simply wait for other governments to step in and notes decisions like the former provincial government’s rejection of the city’s request for permission to toll the Gardiner Expressway and Don Valley Parkway and Premier Doug Ford’s government move to cancel increases to cities’ shares of gas tax revenues that helped fund transit repair needs were “wrong.”

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“We are at a key point in the history of our city where we must invest in our infrastructure to move the city forward,” the speech says.

The speech will also say the savings identified in the Ernst and Young review — including in the city’s procurement processes — will be implemented as part of the 2020 budget process. That is also subject to council approval, but likely to pass with Tory’s advocacy.

Jennifer Pagliaro

Jennifer Pagliaro is a Toronto-based reporter covering city hall and municipal politics. Follow her on Twitter: @jpags


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