Budget Overview!

Here is some of the analysis and thinking we have been doing over the last week since the budget draft came out. In short, we have a lot of investments to make if the City is going to work, many of the items on it cannot be delayed further, and there are some sensible ways to fund them, but they need some shifts in approach.

COSTS

On the transit side alone it is a massive bill:

The TTC’s own staff say they need to spend $660 million on vehicles just to keep the current service standards. Virtually none of that is budgeted.
Since we are constantly moving buses to cover for streetcar and subway issues, we also need to optimize our surface transit, at a cost of $100 million, of which only $30 million is currently budgeted.
The Fair Fare Pass, designed to make transit more affordable for low income households and residents of social housing, was originally to be completely rolled out this year, but fully implementing that will cost another $25 million which has so far not been budgeted.
That is aside from the ongoing demands of subway repairs that are still underfunded by $1.8 billion per year.

Significant investments in housing also needed, including:

Investments already announced in the HousingTO plan that will take billions to fully implement,
The $411 million needed for TCHC repairs

With the emphasis the budget presentations put on the Values Based Outcome Review, tabled at Executive Committee last month, which proposes privatizing services like childcare and automating services like 311, now is as important a time as ever to stress the need to invest in people and in services.

Addressing this is helped a lot by the new City Building Levy. The Levy will bring in an additional $30 million from residential property tax payers in 2020, then provide another $60 million in 2021, and $45 more each year after that.

For the last decade TTC riders have also made a significant contribution. Fares have risen 42%, roughly three times the rate of inflation, contributing an extra $295 million more each year to the city’s coffers than they did a decade ago.

REVENUES

Unfortunately, the cost of the investments we need exceeds the revenues we can anticipate from the City Building Levy, and fare increases.

A big reason for the gap is the fact that commercial property taxpayers have contributed less and less to building our city. Due to a combination of provincial and municipal policies, commercial property tax rates have stayed far below the rate of inflation for over a decade. Where commercial taxes once made up over ¼ of city revenues, they now make up less than 1/6; a difference that takes over $200 million out of the budget each year.

Current provincial legislation prevents a significant increase in commercial property tax rates, but the City has access to revenue tools, such as a Commercial Parking Levy, that can raise a similar amount from businesses. The report Council commissioned from KPMG in 2016 indicated a commercial parking levy could raise between $171-$535 million per year from businesses that own parking lots.

With capital investment properly addressed, the city’s operating budget—which is currently saddled with about $558 million each year in debt payments and $353 million in “capital from current” contributions—can have some of that weight lifted and some space can be found in the operating budget for investments in services and staff.

Here are a couple of graphs that illustrate some of that data:

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