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Province to cover part of Toronto’s $700M shortfall – Hamilton Spectator

The Doug Ford government said Wednesday it would provide funding to cover one-third of the pandemic-driven shortfall in Toronto’s 2022 operating budget, which city staff estimate at $703 million.

The Doug Ford government said Wednesday it would provide funding to cover one-third of the pandemic-driven shortfall in Toronto’s 2022 operating budget, which city staff estimate at $703 million.

Mayor John Tory sees progress but wants more ‘clear and explicit’ commitment to help on loss of development charges.

By Ben SpurrCity Hall Bureau

Wed., Nov. 30, 20225 min. read

Article was updated 2 hrs ago

Toronto got a lifeline Wednesday as it struggles to shore up its budget against ongoing damage from COVID-19 and the unexpected fallout from the province’s new housing bill.

Premier Doug Ford’s government announced Wednesday it would fund one-third of the provincial capital’s 2022 pandemic-related operating budget shortfall, which the city’s latest estimates peg at more than $700 million.

However, Mayor John Tory warned that Toronto’s long-term financial health is far from assured, as he and other Ontario municipal leaders wait to learn how much of the potentially huge costs of the provincial housing plan they’ll be forced to bear.

In a letter to the mayor, Municipal Affairs and Housing Minister Steve Clark said Ontario’s Progressive Conservative government was making the commitment in “the spirit of strengthening” the province’s “long-standing partnership” with Toronto.

“Since the day our government took office, we have been steadfast in our support and empowerment of our municipal partners,” he wrote, noting Ontario has given Toronto $2.8 billion since the start of the pandemic.

Tory had set Wednesday as the deadline by which the city needed additional funding commitments from the provincial and federal governments, and he called Clark’s letter a “significant step forward.”

But the mayor said the federal Liberal government now has a “clear” responsibility to help fill the remaining gap, which stands at about $470 million. He acknowledged Toronto might also have to contribute, which the city could do by dipping into a COVID-19 backstop fund and reallocating money from its capital budget.

In addition to help with the 2022 budget, Tory has also called for urgent assistance tackling the opening shortfall in Toronto’s 2023 financial plan, which city staff have estimated at almost $1.5 billion. Without help, he has warned the city could be facing “extreme” service cuts and tax increases.

But Clark’s letter offered no assistance for next year’s shortfall. Instead, the minister wrote that it was “critical” the mayor use the support the province is providing this year “to take action to address Toronto’s forward looking operating pressures.”

There was also no new funding commitment Wednesday from the federal government, for this year’s budget or next. A spokesperson for Deputy Prime Minister and Finance Minister Chrystia Freeland said in a statement that Ottawa has been a “reliable partner” to Toronto and other cities since the onset of the pandemic, and has already provided them more than $5 billion in emergency funding.

In a potentially significant development, Clark did open the door to reimbursing the city for the financial impacts of Bill 23, the sweeping housing legislation the province passed on Monday.

The bill will reduce or eliminate development charges on some new development projects. Ford’s government says municipal fees and taxes add an average of $116,900 to the upfront costs of a single-family home in the GTA, and reducing those charges would ease the housing crisis by spurring construction and lowering prices.

But the city says it uses development fees to to build roads, sewers, transit and other infrastructure required for new homes, and the province’s bill will starve Toronto of more than $200 million of that revenue annually. Tory has characterized Bill 23 as taking money from cities and giving it to developers, and said it would be financially devastating for Toronto.

Clark’s letter said the province plans to launch a third-party audit of Toronto’s finances, “focused on reserve funds and development charge administration,” which it says will help determine the impact of the bill. He wrote that Queen’s Park will ensure the City of Toronto is “made whole” if the legislation affects its “ability to fund housing-related infrastructure and services.”

The mayor said compensating the city for any loss in development charges is vital, but the province’s commitment on the issue was “not as clear and explicit” as he would like.

Tory said he would continue discussions with the province about the legislation, but if those talks “cease to be productive” he is prepared to go on the offensive.

“I have put the weapons down, I have not put them away,” he said.

“If we’re forced to absorb the cost of this provincially invented deal with developers and/or cancel desperately needed investment, we will make our voices heard in this matter in a way that is consistent with the size of this threat to the well-being of this city,” he added.

Outside of Toronto, cities across Ontario have been sounding the alarm on how they are expected to pay for future infrastructure and services with no reassurance of development dollars due to Bill 23. They say they, too, are still reeling from depleted coffers due to COVID-19.

The Association of Municipalities of Ontario (AMO), which represents the province’s 444 municipalities, estimates the bill will cause a $5.1-billion revenue shortfall over nine years, including $400 million in lost funding for community housing.

Civic officials across the region are using words like “unfathomable” and “devastating” to describe the fallout — tax hikes, service cuts and axed capital projects such as roads, sewers and transit.

Late Wednesday, the AMO got a similar letter from the province “committing to ensuring municipalities are kept whole for any impact to their ability to fund housing enabling infrastructure because of Bill 23.”

The letter said the province will also audit “select municipalities” to get a “factual understanding” of their handling of development charges.

AMO president Colin Best called the letter “a welcome and very positive development” and said the association would work with the province “to better understand the amount, timing and conditions of the funding.”

At a press conference Wednesday before the AMO letter was made public, Mississauga Mayor Bonnie Crombie said she would “welcome the opportunity to … run the province through our numbers.”

Crombie estimated Mississauga could lose up to $885-million over the next 10 years in development charges without help from the province and federal government.

She invited the province to offer the same support Toronto got Wednesday to help pay for the $52-million deficit Mississauga is projecting for 2023.

“We want to work with the province to achieve our shared goal of addressing affordability and building more homes … we just need to get on the same page as to how we get there.”

With files from Noor Javed

Ben Spurr is a Toronto-based reporter covering city hall and municipal politics for the Star. Reach him by email at or follow him on Twitter: @BenSpurr


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