Toronto to offer buyouts to 17,000 city workers

About 17,000 municipal workers in Toronto will be eligible for a buyout package as the cash-strapped city tries to pare a $774-million budget shortfall.
The City of Toronto will offer buyout packages to its workers to help pare its massive cash shortfall. (Andrew Lupton/CBC)

About 17,000 municipal workers in Toronto will be eligible for a buyout package as the cash-strapped city tries to pare a $774-million budget shortfall.

City manager Joe Pennachetti announced details of the buyout offer on Tuesday afternoon.

Pennachetti said he's not sure how much the buyouts will cost, since it's not yet known how many people will take the offer.

The deadline for workers to accept the voluntary offer is Sept. 9.

Union, non-union and management employees are all being offered buyouts of up to six months salary. Pennachetti said police, transit and library workers are not included.

How the buyouts will work

City of Toronto employees have until Sept. 9, 2011, to apply for the buyout, which must be approved by management.

Payouts will come in lump-sum payments, with the payout amount based on years of service.

Union employees will receive three weeks of salary for every year of continuous service with four weeks of salary per year of service for management.

The maximum payout will be six months’ salary, which would apply to employees with nine years of service or more.

The buyout period will start on Oct. 1 and end by December 2011.

About 45 per cent, or $4.6 billion of the city's operating budget, is earmarked for salaries and benefits.

Earlier on Tuesday, city budget chairman Mike Del Grande said cuts to city staffers were inevitable.

"I would not preclude the fact that obviously when you are looking at labour being your largest cost you would look at strategies of what you might or might not do with respect to the labour force," he told CBC's Metro Morning.

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

The city is currently releasing components of an extensive study prepared by KPMG, an independent auditor, laying out all the areas where cuts could possibly be made. It is then up to city council and associated committees to determine which of those cuts will be implemented.

KPMG has already released two such reports — one concerning the public works department, and the other, released Tuesday, pertaining to economic devlopment. Further such reports will be released over the coming days.

On Tuesday, Mayor Rob Ford spoke about the need to cut costs, saying salaries are a "big chunk" of the city's budget.

"We have too many employees down at city hall," he said. "And we have to find ways of giving them packages to move on, or entice them to move on," he said.

"We just can't carry 53,000 employees any more. Our labour force is too big."

However, Coun. Janet Davis said offering buyouts is a premature move.

"I think they’ve put the cart before the horse," she told CBC News. "Why would we be talking about exiting people out the back door before we even know what services are going to remain and what our human resource needs are?"