An independent auditor's report says Toronto could cut about 2,000 daycare spaces and merge its fire department and emergency medical services units to help save millions of dollars.

The 55-page review conducted by KPMG on behalf of the city, looks at ways to save money within the city's Community Development and Recreation departments.

The review found that 87 per cent of activities within programs reporting to the Community Development and Recreation Committee are either mandatory or essential, while the other 13 per cent of services are classified as traditional, which means portions of the activities could be eliminated or phased out.

Indeed, among the 23 suggestions contained in the report, the suggestion to phase out daycare spaces within the city is surely to garner the most reaction.

"The subsidies for 2,000 spaces that no longer receive provincial support could be reduced or eliminated," the report said. "Phasing out may be necessary to manage the impact on families."

KPMG said the childcare centres operated directly by the city could be converted to non-profit or private operation to reduce costs. However, it warned that care would be needed to ensure the attention of special needs children are met, and to ensure active spaces remain properly distributed.

The province shares the cost of 22,000 subsidized paces in the city, but provincial funding for an additional 2,000 spaces ended and the city now funds 100 per cent of these spaces.

The consulting firm also suggests the city stop the inspections of subsidized child care centres and hand that responsibility over to the province.

The Community Development and Recreation Committee will consider the proposals when it meets next Wednesday.

But Councillor Janet Davis is hoping Mayor Rob Ford reacts quickly to these suggestions.

"These are options that would decimate the very important social services that exist in our city and I am hopeful that the mayor will come out now and say these things are off the table," she said.

Fire and ambulance

The review also suggested that the city needs to find better ways to allocate emergency resources to "changing needs" and suggested that the fire services and EMS departments be merged as a first step to "creating the climate where this could occur."

"Simply integrating the organizations will not create massive change initially, but it should start the long process to providing more efficient emergency response services," it said in the document.

With some 80 per cent of all fire calls are medically-related, the auditor suggested that response times might be improved by merging the two departments.

Wednesday's document is the third in a series of reviews that have begun rolling out this week in a bid to pare down the city's operating budgets.

Earlier this week, the auditor suggested a wide-range of cuts to services offered by the city's Public Works and Infrastructure division, from solid waste collection and snow removal to eliminating fluoridation in Toronto's drinking water.

Toronto is faced with a looming $774-million budget shortfall. In the spring, the city kicked off a comprehensive review of all city services, how they are provided, and the fees people pay for them.