Toronto Faces $915-Million Budget Deficit as New Mayor Takes Office

Strategic Insights -

Toronto is facing a significant budget deficit, with a forecast of $915-million this year, due in part to reduced transit revenues and higher shelter costs. The city's executive committee is set to discuss budget-related reports today, ahead of the inauguration of new mayor Olivia Chow. Chow will inherit a dire financial situation, with a long-term outlook from Ernst & Young projecting a shortfall of almost $50-billion over the next decade.

Key Takeaways:

  • Toronto forecasts a budget deficit of $915-million this year, primarily due to reduced transit revenues and higher shelter costs.
  • The city plans to address the deficit by redirecting $300-million from the capital budget and $95-million from the pandemic reserve fund.
  • The capital budget will be set aside for expenses in future years, including the purchase of new ambulances and upgrades to Exhibition Place.
  • The city is planning to plug this year's budget hole by using up most of the pandemic backstop, which would limit its ability to address future COVID-19 spending shortfalls.
  • Expenses are increasing, including costs for social housing and addressing the climate crisis.
  • Experts suggest that the city should renew its look at what it should be responsible for and how to pay for it, possibly by uploading some responsibilities to the province.
  • There has been talk about the province taking on the costs of fixing the Gardiner Expressway and Don Valley Parkway.

Statistics:

  • $915-million: forecasted budget deficit for Toronto this year
  • $300-million: redirected from capital budget to address deficit
  • $95-million: redirected from pandemic reserve fund to address deficit
  • 95%: of over $5-billion in reserve funds committed to future operating expenses and infrastructure projects
  • $720-million to $920-million: projected COVID-19 spending shortfalls for next year alone
  • 2022: year ending with a deficit of $395-million
  • $235-million: funding provided by the province to address 2022 challenges

Sources:

  • The Globe and Mail
  • Ernst & Young
  • Enid Slack, director of the Institute on Municipal Finance and Governance at the University of Toronto's School of Cities
  • Murtaza Haider, professor and research director of the Urban Analytics Institute at Toronto Metropolitan University
  • Olivia Chow, incoming mayor of Toronto