Toronto homeowners will see a 10.5 per cent tax increase in Olivia Chow’s first proposed budget as mayor

The first budget proposal under Mayor Olivia Chow includes a 10.5 per cent property tax increase, one of the largest the city has seen in years, as Toronto struggles to make up for a persistent deficit.

Budget Chief Shelley Carroll announced the proposed tax rate ahead of a Budget Committee meeting on Wednesday.

The levy includes a nine percent increase in property tax, as well as a 1.5 percent increase to the city’s building fund. It will mean an increase of about $360 a year for the average Toronto household, Carroll said.

“It’s no secret that this is going to be a challenging financial year,” Carroll told reporters.

“Six months ago, we inherited a $1.5 billion budget deficit as a result of years of underinvestment and unpredictable partnerships from other orders of government, with additional pressures continuing throughout 2023, particularly on our shelter system,” he said. “That deficit now sits at just under $1.8 billion. I firmly believe we can’t continue to delay that issue. We need to get our city back on track.”

The proposed tax increase comes even after city staff found more than $600 million in cost savings and avoidances for the 2024 budget year “through sound financial management,” Carroll said.

Toronto has been struggling to fix its finances amid trailing losses from the COVID-19 pandemic, as well as high inflation that has driven up costs.

The city is now dealing with a confirmed operating budget deficit of $1,777.6 billion, up from a previous projection of $1.5 billion.

City staff said Wednesday that would amount to a 42 percent increase in property taxes if offset by property taxes alone.

Unlike in recent years, when Toronto has faced budget shortfalls in the wake of the COVID-19 pandemic, this year there will be no more money from the federal government to plug the hole from the fallout.

The city recently achieved a major financial victory in an agreement with the province that will see Ontario assume responsibility for the Gardiner Expressway and Don Valley Parkway. That deal will unlock billions for the city in the coming years and will already free up $400 million by 2024, Carroll said.

But he said the city still needs more from other levels of government. Toronto has also been asking the federal government for more funding, particularly for refugee housing and shelter.

Before the budget process, Chow said he would evaluate the city’s needs before the tax rate was determined.

The budget includes a small increase to the police budget, as well as a freeze on TTC fares by 2024.

Carroll said this is the first time in 15 years that public consultations were held before the rate was decided.

“This year’s budget is different. It comes under a new administration and a new way of doing things,” he said. “This budget is based on real conversations with you, Torontonians. The people of Toronto, for the first time in a long time, were able to participate from the beginning. Therefore, it truly reflects the cost of running the city that you expect, the one you told us you think you deserve.”

The Council will debate and vote on the budget in February.

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