The provincial government offered Toronto a line of credit to cover an $86 million shortfall in the city's budget, but Mayor John Tory is not interested, he announced on Thursday.

He will look elsewhere to balance the budget, he said.

Tory said he looked at the offer and decided its terms were unfavourable to the city. The line of credit included interest rates decided by market rates and using city property as a security.

"We concluded the the city can do better on its own," said the mayor during a budget update at city hall.

CounDenzil Minnan-Wong, Tory's deputy mayor, was less polite in declining the line of credit. "At the end of the day we decided, you know what, ‘Thanks for nothing,’" he said.

Tory initially said he would take Ontario’s offer of a $200 million line of credit to balance the budget.

Instead, the city now plans to divert some money from property taxes — typically used to pay for capital projects such as arenas and sidewalks — and use it to plug the shortfall in this year's budget. It will then take out a bank loan to pay some of that money back. 

Tory said the unprecedented move is intended to protect certain services and to keep property taxes in line with the rate of inflation. 

"This approach may carry other costs. It may well mean we will have to press pause on some capital projects that can wait," Tory said at a news conference. 

"The other options for this year's budget are to gut services or raise taxes through the roof, neither of which I'm prepared to do."

Working with Wynne

Refusing the line of credit raised questions about the mayor's relationship with the provincial government. Tory campaigned on a promise to work with Premier Kathleen Wynne in ways his predecessor, Rob Ford, did not. On Thursday, Tory reaffirmed he would continue to work with Wynne, and also added that Ford made "no effort" to work with her at all.

Charles Sousa, Ontario's finance minister, said weeks of negotiation went into the line of credit offer.

"We understand the city has decided to seek financing through other means," Sousa said. "We respect that decision."

With files from Jamie Strashin