New taxes on the table as council asks staff to look for new budget-balancing formula

City council voted Tuesday to ask staff to work out ways to balance the annual budget, even if that means levying new taxes.

Expenditure cuts, asset sales also on agenda

Council voted Tuesday to ask staff how to best balance the budget in future, even if that means implementing new taxes (Rebecca Blackwell/Associated Press)

Toronto city council voted Tuesday to ask staff to find ways to balance the annual budget, even if that means levying new taxes.

City Manager Peter Wallace has warned in the past that the city is living beyond its means, annually spending more money than it brings in, and that a sustainable way of drawing up the annual budget needs to be found.

In order to make ends meet in 2017, the city will have to find hundreds of millions of dollars, he said Tuesday, telling councillors they will have to consider cutting expenditures, implementing new taxes and selling off assets.

"I have no interest at all in standing here and continuously providing gloomy reports and generally being a little pain in the neck," he told council. "My preference would be to identify nice ways out of this. I don't have that silver bullet."

$29 billion in unfunded projects

The city relies on property tax revenue, user fees, TTC fares, utility rates, the Land Transfer Tax and infusions of cash from the federal and provincial budgets. But with a budget that runs about $15 billion annually, that's not enough, Wallace said. 

In fact, the city currently has committed to $29 billion worth of new projects, like the TTC's downtown relief subway line, and public housing upgrades, that it has no way of paying for.

But some councillors argued that new and increased taxes — not cuts — should be the focus of staff's efforts.

Among the new levies on the table are alcohol, tobacco and entertainment taxes, a parking tax, a resurrected vehicle registration tax, road tolls, a hotel tax, a municipal sales tax, a share of the federal income tax and a development levy.

'Look people in the eye'

"This myth, this rhetoric, this deceit that is practiced on Torontonians, where people only represent taxes as being a cost that people can't bear, must end," Coun. Gord Perks said.

Later, Mayor John Tory emphasized that the city will need all three money-generating methods — asset sales, cost-cutting and new revenue tools — to make ends meet.

"If we're going to look people in the eye and say to them we need to get this revenue from you to build subways and build housing and produce social justice in this city, we're going to have to reduce expenditures as well," he said.

The final motion that passed by a vote of 40-3 included an amendment calling on staff to look at how much the city could save by contracting out some services.

Staff is expected to report back to council with its final recommendations on how to produce a sustainable annual budget in the fall.