Fixing the city’s finances

The City of Toronto faces a significant budget shortfall. In other words, there is not enough revenue coming to fulfill the City’s service priorities. To solve this complex problem, the City must reduce its expenses or  increase the dollars coming in  — or both.

Every year, the City begins drafting its operating budget by estimating its revenue gap. In recent years that gap has been growing, leaving city’s finances in an unsustainable position. A recent op-ed in the Toronto Star, co-authored by TD Bank Financial Group Chief Economist Don Drummond and Toronto Board of Trade President and CEO Carol Wilding, explains the City’s operating budget difficulties in greater detail.  The capital budget also faces a long-term shortfall that stood at $1.59 billion in 2009. In years past the City has relied on transfers from senior levels of government to cover these gaps.

Resolving these shortfalls will be no simple task. Some key components to consider include:

  • The cost of wages and benefits
  • Operational efficiencies
  • Outsourcing or alternative delivery of some City services
  • Multi-year budgeting
  • Property tax policy
  • Asset management

Discussion Questions

  • What balance should be struck between expenditure reductions and revenue increases?
  • Should the City consider a) getting out of the business of delivering certain services or b) reducing service levels?
  • Can the City expect other governments, which are themselves beset by deficits, to accelerate uploads and increase transfer payments? If so, how should the City best position itself to engage these governments?
  • How can the City address the persistent issue of  “leapfrogging” wage settlements that cause Toronto’s wages to spike above other jurisdictions, especially those that lie within the GTA?
  • Building on recent efforts, how can we creatively bring together underutilized properties and buildings, the TTC, school boards, public housing and the parking authority to generate new revenues and achieve public policy objectives?

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