New minimum wage bill could cost city $20M a year, budget chief warns

The province's new minimum wage bill could cost the city in excess of $20 million a year, CBC Toronto has learned, and no one has determined how that shortfall will be made up.

No plan yet to cover shortfall, but tax hike ruled out

Coun. Gary Crawford, who represents Ward 36, Scarborough Southwest, chairs the city's budget committee. He's warning of a potential $20-million budget shortfall, related to the province's bill to raise the minimum wage, which passed at Queen's Park Wednesday. (Sue Goodspeed/CBC News)

The province's new minimum wage bill could cost the city in excess of $20 million a year, CBC Toronto has learned, and no one has determined how that shortfall will be made up.

But budget chief Gary Crawford told CBC Toronto Thursday he's determined not to make up the difference with a big property tax hike.

The financial pressure on the city will begin in January, when Bill 148 will push the minimum wage from $11.60 an hour to $14. That will cost the city about $1.8 million next year, Crawford said, but the most serious impact will come from the bill's other provisions.

Increases in parental benefits and vacation pay will have a far greater effect on city workers, and the city's coffers, he said.

"We're looking at potentially upwards of $20 million a year, if and when everything is implemented," he said. "There's going to be a challenge, absolutely, to figure this thing out." 

'Keep taxes low'

To put that figure in perspective,  he said a one per cent property tax increase generates about $26 million.

Even so, Crawford said he's committed to holding property tax increases to the rate of inflation, or lower.

"We'll continue to work to keep property taxes low and continue the kind of investments that I think we need, where there's TTC  and poverty reduction, so were going to continue that. It puts more pressure on us, absolutely"

10,000 city parks workers affected

How realistic is that commitment? "There are some of my colleagues on council who say you can't do the investments without raising taxes. I disagree. We've done it the last three years and we're going to continue it this year," Crawford said.

Although most unionized city employees won't be affected, there are thousands of others who will be, mainly in the Parks, Forestry and Recreation Department, which employs about 10,000 part-time and casual workers.

The minimum wage hike will cost the city a relatively modest $1.8 million next year, Crawford said, but that new minimum will tend to nudge the salaries of other workers upward as well.

Bill surprised city

That pressure, along with the costs of increased maternity benefits and vacation pay, haven't yet been pinned down he said, partially because the minimum wage bill took the city's budget staff by surprise.

"The struggle we have is when other levels of government impose these kinds of changes," he said. "They're made at different levels, but it impacts us. And sometimes they come very quickly.

"We weren't anticipating the minimum wage increase a year ago, and now we have to include those numbers" in 2018 budget estimates, he said. "So there's a lot of work to be done."

On Monday, the city's budget committee meets to discuss the new fiscal pressures brought on by Bill 148.
The issue goes to the mayor's executive committee later in the week.

Bill 148, which passed in the legislature Wednesday, raises the minimum wage from $11.60 an hour to $14 starting in January. It moves up to $15 an hour in 2019.