Tory asks council to back study of new taxes and fees, calls for new 'fiscal framework'

Mayor John Tory is asking city staff to study a range of new taxes and fees thatcouldaddress Toronto'sfinancial challenges ina report that could come before council this summer.

Tory made the requestin a motion to city council this week asking staff to examine a series of "revenue tools,"update their estimatesof the amount of money they could raise andwhat they'd cost to administer. The motion also calls on staff toassess how such taxes and fees havebeen used in other cities.

Tory said it'spart of his push to create a new "fiscal framework" for Toronto, and all cities, as they grapple with budget shortfalls made worse by the COVID-19 pandemic.

"I think with the updated information we can then make an assessment in the clear light of day as to what should be done," he said, adding that he also wants a "broader discussion" of the role of the federal and provincial governments.

"It can't all be up to us to do this all at the local level."

Toryestimates the city's current spending gap amounts to over $1.5 billion related to costs from2022 and 2023.Heblames the city's "COVID hangover" for much of the problem and says Ottawa and the provincemustaddressit..

The province has committed to cover some costs related to pandemic measures for 2022, butthus far the federal government has not.

Property taxes aren't enough,Tory says

Tory has long maintained that Toronto's main source of revenue, property taxes, can't fund allprograms and services. Theyalso can't keep pace with the city'scrumbling roads, sewers and expressways,with a $9.5 billion state-of-good repair backlog this year expected to double over the next decade.

Tory said he can't keep going to both levels of government to press them to pick up the tab every year.

"It's like Groundhog Day," he said. "You just go on and on and on."

Coun. Chris Moise has seconded Tory's motion, and in recent months has stressed that the city must look at the new taxes and fees. It can no longer afford to wait for bailouts from upper levels of government, he says.

Moise, who represents Ward 13, Toronto Centre, is optimistic that with the mayor's backing, council will endorse this study. He's hopeful that some of those taxes or fees will eventually be adopted.

"I think we need to have a long-term strategy in place to make sure that we don't use this stop-gap year-after-year."

Moise supports implementing a commercial parking levy, which would tax large lots and could raise hundreds of millions of dollars a year. The motion set to hit the council floor has a specific request to study that tax.

"Montreal, Vancouver, New York, they all have it," he said. "So we, as a city, can decide how we want to implement it."

City funding drawn from rules created in 1840s

Enid Slack, the director of the Institute on Municipal Finance and Governance at University of Toronto's School of Cities, says Torontofiscal problems can be traced back to legislation crafted in the 1840s.

The funding powers awarded toall communitiesat that time limited their ability to raise money through means other than property taxes, user fees or government transfers, Slack says.

"Municipalities didn't do very much back then," she said.

"I think we need to rethink that based on what they are doing and what they should be doing. Do they have the right revenue sources to pay for them?"

Slack saysthe city should try to work out a new agreement with upper levels of government. But it could also create some taxes on its own, which are within its power under existing legislation.

"Those revenues are fairly small in magnitude," she said.

."You're talking about alcoholic beverage taxes, entertainment, taxes, tobacco taxes, motor vehicle registration, tax and commercial parking Levy," Slack added.

"The commercial parking levy could potentially bring in the most revenues, but still wouldn't meet that shortfall."

'There will be a backlash'

Former city councillor Joe Mihevc saysevery generation at city council faces the same questions about how to raise revenue and balance the budget. Hewants council to adopt new taxes or fees, but he says itwill be politically difficult.

"There will be a backlash from folks; there historically has always been when you've imposed a tax on anything," he said.

"This time, perhaps, council will have the nerve and the strength and the commitment."

Mihevc saysthe larger challenge for Tory will be to somehow persuadethe province togive the city a better fiscal deal.

"Provincial governments have a real tough time decentralizing. And this provincial government probably has one of the most difficult times not putting their hand in the city's cookie jar."