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What do you need to know about Toronto’s budget?

The 2018 city budget is set to go to city council on Monday. It is being described by Toronto Mayor John Tory as “balanced” and “affordable”, focusing on low taxes and transit.

The $11 billion operating budget sets the tone for services and capital projects for the next year. The city is planning on investing in transit, shelters, recreational spaces, and the Vision Zero plan, among others. The revenue for this budget is being collected from various sources, including taxes, TTC fares, provincial grants, and reserve funds.

Residential property taxes are set to increase 2.1 per cent along with the rate of inflation, while commercial taxes will only increase by one per cent. The city will be relying on approximately $800 million collected from the municipal land transfer tax to fund services, something city manager Peter Wallace says is dangerous considering the real estate market.

The budget will include $9 million for traffic initiatives, including $1.6 million for traffic wardens, $477,000 to fix temporary lane blockages on the Gardiner and Don Valley Parkway, and $2.7 million for smart traffic signals. “Over the last three years, people across the city have made it clear that traffic is one of the most important issues they expect City Hall to tackle,” said Chair of Public Works and Infrastructure Jaye Robinson, in a statement. “The 2018 budget builds upon work we have done each and every year on the City’s congestion plan to get Toronto moving.”

There will be a significant investment in transit this year, with over $50 million in new investments to the Toronto Transit Commission, including $4.8 million for the TTC Fair Pass, which will provide discounts for low-income riders, and the hop-on-hop-off transfer.

“I want every transit rider in this city to know that I am absolutely committed to improving and expanding the TTC so that their daily commute improves,” said Tory. “We are doing everything possible to make sure the existing system is running properly and that we are expanding transit as fast as possible for the future.”

Other highlights include $279 million in new funding for Toronto Community Housing Corporation, $486 million for the George Street revitalization, the creation of 825 new child care and 20,000 new recreational spaces.

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Woman of the Week: Margaret Zeidler

Margaret Zeidler is one of the biggest Jane Jacobs fans you will meet. In fact, she attributes much of her success and innovation to the urbanist’s theories.

While Zeidler has studied much of Jacobs’ work,  it was two sentences in the chapter “The Need for Aged Buildings” of The Death and Life of Great American Cities that inspired the creation of a company called Urbanspace and 401 Richmond, an urban community for artists and entrepreneurs.

“Old ideas can use new buildings, but new ideas need old buildings,” she said. “It was a waking up for me – you can’t solve everything with architecture and maybe you shouldn’t try to do that. These things that seem like they need to be fixed or torn down actually have a purpose in the economy to the city. That’s what 401 Richmond is all about”

Zeidler found and bought the industrial building complex in 1994 at a time when property prices were at an all time low. In 18 months, Zeidler led a team that transformed the warehouse into a vibrant workplace that housed a number of tenants with art and culture backgrounds, most hoping to kick start their careers in Toronto. The buildings have since been designated a heritage site.

401 Richmond now houses 140 tenants, all artists, entrepreneurs, or heads of social enterprises that are using spaces to launch their non-profits or startups. There are 12 galleries showcasing art of all kinds, a dance school, a roof garden, and Studio 123, an early learning centre. Each aspect of 401 Richmond works together to create a sustainable community and inspire ideas.

401 Richmond also has what’s called a career launcher studio, which is given to a graduating art student for a year to start their practice. All of these things together create a diverse community where artists and dreamers could thrive.

“I love it. It’s gorgeous,” Zeidler said of 401 Richmond. “It has almost 1000 windows in it – wood and metal, beautiful old fashioned windows. We are constantly doing renovations or adding new tenants that we think will be interesting. It’s a wonderful place to be and work. You run into all kinds of fabulous people.”

Zeidler expanded the idea through UrbanSpace by purchasing a new warehouse further down Spadina to be used as a co-working space for non-profits and startups. This led to a co-founded space called the Centre for Social Innovation, a shared workspace for over 170 nonprofits, social enterprises, activists, and artists.

“We talked to a bunch of young people working out of their basement,” Zeidler said. “They wanted to be in a community and talk to people and work physically in a space with people doing similar work.”

These urban communities, specifically 401 Richmond, is currently facing it’s own set of troubles. The space was hit with a property assessment that doubled the buildings’ tax bill. These same taxes are set to jump by another 21 per cent, making it difficult for Urban Space to continue and provide below-average rent costs for tenants — a staple of the entire 401 Richmond concept.

The issue is still being worked out, with the City of Toronto actively pushing for an exemption using a provision classified as “community benefit.”

“There are reasons why it’s useful to have inexpensive and mixed space within a core, especially when it’s rapidly gentrifying,” Zeidler said. “It’s about invention and new ideas.”

Zeidler will not be deterred. She spends as much of her free time at 401 Richmond as she can and remains active in the management of the community. “People are said to feel welcome. Diverse and happy place. We spend a ton of our lives working and it would be so nice to work on something you love but also in an environment you love.”

Zeidler is currently reading Becoming Jane Jacobs by Peter L. Laurence.

 

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City council votes to support tolls

“You rarely have to ask permission to do the right thing.”

This quote comes from an open letter released Tuesday morning, with the signature of five different Canadian mayors attached to it. The letter calls for more municipal power to create city revenue, so that municipal leaders can match infrastructure funding provided by the provincial and federal governments.

In essence, Canada’s biggest cities, including Toronto, were asking for the power to do their part to expand and grow.

This sentiment was much needed prior to the city council meeting Tuesday, where councillors discussed how they would be paying for city services for the foreseeable future.

After much debate, city council approved staff recommendations by staff to generate revenue by using various taxes and tolls. The implementation of tolls is a brave new step for the city – proof that politicians understand the need to create revenue and alleviate congestion on city roads.

Toronto Mayor John Tory proposed the use of tolls on the Don Valley Parkway and the Gardiner Express over a month ago, and since then it has received a mostly positive response. The money would be directly funnelled into maintaining and funding transit-related projects, which works to both alleviate congestion on roadways and expand Toronto’s transit network.

City council ultimately voted in support of the mayor’s proposal. Nine councillors opposed the motion.

These tolls, which could be implemented as early as 2020, would affectively alleviate congestion, unlock gridlock, and help pay for the much-needed transit network being built throughout Toronto. A win-win scenario.

Council also agreed to look into a 0.5 per cent levy on property taxes, a four per cent tax on hotels, up to a 10 per cent tax on short-term rentals like Airbnb, and harmonizing and/or increasing land transfer taxes. The city will also be asking the province for a share of the harmonized sales tax.

The debate on tolls will continue in the new year, when city staff will present options for implementation, including cost.

City Manager Peter Wallace made it clear in his presentation on the city budget that council had to approve of some of the proposed revenue tools — if they didn’t, they should be prepared to provide solutions to the $33 billion in unfunded projects the city is undergoing.

“I think it comes down to what level of public service does city council want to endorse,” Wallace said bluntly. He also made it clear that by voting to take tolls to the next level, council can rest assured that city staff will proved thoughtfully.

Other councillors were not so thoughtful. Many ignored the fact that people pay for the use of public transportation and that user fees are popularly used in large cities. However, at the end of the day, even the wary councillors understood the need to make a firm decision or risk being left with a large revenue gap to fill.

And to that brave majority, Toronto thanks you.

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What’s the deal with Toronto’s revenue tools?

The City of Toronto is facing a budgeting crisis with over $91 million worth of funds to find by City Council. Several revenue tools were presented by city manager, Peter Wallace in an effort to find money to fill the gaps and pay for all of the projects that are much-needed in Toronto.

Terms like ‘property tax’, ‘municipal land transfer tax’, ‘parking levy’, and ‘expressway tolls’ , are being thrown around like crazy, and it is easy to get lost in the world of financial terms. Understanding the inner-workings of the various revenue tools is the best way to decide which financial tools should be adopted by the city and which of them should be discarded. That’s why Women’s Post has created this guide, to help our readers understand the ins and outs of the revenue tools presented in the executive committee, and what terms will be flying around next week at city council.

Property Tax

Property tax is a commonly used revenue tool and is most often brought up in city council. A property tax is a levy on a property the owner is required to pay. It is set by the governing authority of any given area, which in this case is the municipality of Toronto. Property taxes in Toronto are a hotly contested issue because Toronto property tax rates are the only metropolitan tax that is lower than the surrounding area, the GTHA, and politicians don’t want to raise them. The city has proposed a two per cent property tax hike, but Toronto Mayor John Tory vows to raise the property tax no higher than half a per cent. Instead he is pushing for alternatives instead of pushing more tax on property owners.

Municipal Land Transfer Tax

Municipal land transfer tax has been a popular option for Toronto in the last year and helped keep the property tax inflation rate at bay in last year’s budget. The municipal land transfer tax is a fee that is paid by the person who purchases the home to the municipality that is charging it. There are rebates for first-time home buyers and other jurisdictions, such as Vancouver, have imposed a foreign land transfer tax to help lower inflation in the real estate market. It is a useful tool, but was used in the 2016 budget so may not be a viable option when looking at other options for 2017. City Council will discuss harmonizing the Ontario land transfer tax with the municipal option, which would require legislative changes but would streamline the process in the long-run.

Personal Vehicle Tax

The personal vehicle tax has been a revenue tool that was presented in the past before at City Council and was not a popular option. Council will consider the re-introduction to tax $120 per vehicle annually, but Tory has stated he is not a big fan of this option. The rejection of the personal vehicle tax has angered environmental groups who want to see people choosing to drive vehicles in the city pay extra taxes. The personal vehicle tax is also an easy and quick tax to implement because it doesn’t require any extra infrastructure.

Hotel Tax

The hotel tax revenue tool is being hotly contested by the tourism and hotel industry, which has already seen slowed growth due to the increasing popularity of air bnbs and other short-term stays. By placing an extra tax on the hotel industry, it may put more pressure on hotels to pay when they can’t afford to do so. Tory rebutted in the executive committee though that the annual subsidy supplied to hotels would help pay for the hotel tax if it were approved. This revenue tool would require provincial legislative and regulatory reforms, and is not a popular option in regards to fairness, efficiency, and is low in revenue quality according to Wallace’s presentation.

Expressway Tolls

Expressway tolls are the newest revenue tool to be introduced by Mayor Tory and is a popular option. The expressway tolls would require vehicles to pay a fee when they use the Don Valley Parkway and the Gardiner Expressway. If the city charged $2 per trip, the annual revenue would be $166 million per year. The start-up cost to build the expressway tolls would be an estimated $100-$150 million and have ongoing operational costs of $50 to $60 million. The expressway tolls would require provincial legislative changes, but could be implemented in the 2017 budget. City Council will be focusing heavily on tolls next week.

There are many other revenue tools that were presented including an alcohol beverage tax, a parking levy, a third party sign tax, graduated residential property taxes, and a municipal sales tax. From the climate of the executive committee meeting, it would be surprising to see any of these options be approved. They have not been given the same amount of attention as the hotel tax and expressway tolls. A graduated residential property tax and a municipal sales tax in particular require provincial legislation changes and were listed by Wallace as aspirational changes to be further discussed in 2018.

In order to fully grasp the many revenue tool terms that will fly around at City Council next week, focus on the most important options that are available. Also remember to bring popcorn. Even though discussing financial tools can be a bit of a bore, City Council is sure to get lively when discussing the various revenue tools that were presented for debate.

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Mayor John Tory right on the money with revenue tools

Toronto Mayor John Tory announced Thursday that he would be proposing the use of tolls and a hotel tax to create extra revenue for transit and infrastructure projects in the city. Prior to that announcement, a report was released by the Munk School at the University of Toronto indicating the need for a multi-tax system to pay for services. The conclusions of the report back up Tory’s decision to actively search for more revenue tools to help pay for the much-needed transit system being built in the city.

The report was written by Harry Kitchen, a professor in the economics department at Trent, and Enid Slack, director of the Institute on Municipal Finance and Governance and a professor at the Munk School of Global Affairs. They argue that property taxes, user fees, and transfers from other levels of governments have remained unchanged as large cities continue to grow and expand. This is unsustainable and larger cities in Canada must adapt.

The authors’ argue that decisions on public spending need to be linked with revenue decisions. This is what the mayor was trying to say in his speech on Thursday — that Toronto can’t afford to keep building and providing better service unless there is a way to pay for this growth.

The report also makes mention of services that benefit people across municipal boundaries like roads. While the report suggests transfer of responsibility to the province, sometimes that isn’t possible. Tolls, for example, would be a good compromise, allowing people who often travel into the city on a daily basis to contribute in a way besides property taxes.

In terms of the property tax, something Mayor Tory refuses to increase by more than half a per cent, the authors’ say it’s a good way to raise revenue for infrastructure, but that a mix of taxes is recommended. Property tax is also more expensive to administer compared to income or sales tax. “The property tax is relatively inelastic (it does not grow automatically as the economy grows), highly visible, and politically contentious,” the report reads. “It may therefore be insufficient to fund the complex and increasing demands on local governments.”

“A mix of taxes would give cities more flexibility to respond to local conditions such as changes in the economy, evolving demographics and expenditure needs, changes in the political climate, and other factors.”

The report suggests charging user fees for services as often as possible, as under-pricing can result in over-consumption. Tolls were specifically mentioned as an example of a user fee that can be used on a major highway or arterial road running into a big city. While high-occupancy tolls, which charges vehicles for using a specific lane, can be effective on big highways, it’s much more efficient to toll the entire roadway.

Revenue collected from the tolls in place on the 407 in 2011 earned the provincial government an extra $675 million. The proposal set forth by Tory indicated an extra $200 million in revenues with a $2 toll charge on the Gardiner Expressway and the Don Valley Parkway. The other benefit is that it will reduce congestion and unlock gridlock while creating funds that can be dedicated for transit.

Other options presented in the report include a parking charge, an increase in personal income and sales tax, a fuel tax, hotel tax, and vehicle registration fee. The conclusion seems to be by increasing/implementing a number of these revenue tools, it won’t affect a singular demographic to harshly while still generating funding for a large Canadian city to grow.

It looks like our mayor was right on the money, so to speak.

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Rob Ford the taxman

Toronto city council voted in favour (28-16) to replace the worn out RT line with a subway from Kennedy station east on Eglinton north on McCowan to Shepperd Avenue East. By approving the subway council has cancelled the $1.8 billion LRT it had approved last year, which was fully funded by the province. It is expected that the under ground subway option could cost close to $1.1 billion more than the LRT.

The subway expansion requires the Federal government contribute at least $418 million and that the province contribute $1.4 billion., and the city make up the additional funds with a 1.1 – 2.4% tax increase along with new development charges.   This places most of Toronto’s portion of the additional funds needed for the subway expansion onto homeowners as development charges get passed on to them as well.

Council approved a series of motions to try to limit the cities risk, and asked that the province and Ottawa commit to funding by September 30.

But perhaps the most momentous event of the past week was that Rob Ford has changed his tune from the “No Tax” man to calling for an increase in taxes to pay for transit in Scarborough.  Like many politicians before him his desire to get re-elected has caused him to change his most sacred position. Rob has spent over a decade raging against any and all tax increases, and yet for the past 3 years done very little hard work — while taking credit for the work of other councillors. Without bothering to do a line by line analysis of all city departments, without finding the efficiencies he promised, without stopping the “gravy train” Rob Ford has chosen to embrace taxes.

Some may accuse him of trying keep his promise of subways, while other might point out that he also promised not to raise taxes, to find efficiencies and stop the gravy train – but to whatever people say Rob Ford has grown into a true politician, authentic to the core he has shown that he is not only a lazy charlatan , but also a hypocrite willing to say whatever it takes to get re-elected.

Rob Ford is calling for higher taxes and I can hear Mayor Miller chuckling…

 

 

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