Toronto does not have a spending problem: U of T report

But "Is Toronto Fiscally Healthy?" a report from the Institute for Municipal Finance and Governance at U of T’s Munk School of Global Affairs, concludes "Toronto has not had a ‘spending problem’" and its programs and services, compared to those of other cities, appear efficient.

"Toronto does not face a fiscal crisis, by any means," the Institute said, adding city spending is roughly what it was a decade ago, after adjusting for inflation and population growth.

Co-authors Enid Slack and Andre Cote do say the city faces a "major infrastructure funding shortfall" and will need new taxes to address it.

Speaking to reporters Wednesday afternoon, City Manager Joe Pennachetti called the report one of the best third-party summaries of the city’s financial position he’s seen in years.

Pennachetti said the city has never been "on a fiscal cliff" – a description Ford has used before, and repeated on Wednesday, to describe the city’s finances when he took office.

Since 2000, the manager said, city spending on programs has generally increased to match inflation, and "many programs haven’t even done that."

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But while there’s "not a lot more room" left to cut expenditures, Pennachetti said, "we don’t have all the revenues to ensure we can grow a city that we all want."

Though the operation of public housing is fully funded in every province except Ontario, the city’s Toronto Community Housing Corporation faces a growing backlog of $860 million in repairs. Pennachetti predicted that will exert the most pressure on councillors in the new term.

Half of municipal public transit operating costs were previously paid by the province – another $250 million the city must cover.

If these costs were, say, reassumed by the province in the next five years, the city would not have to consider "other revenue options" cities such as New York City or Chicago have, said Pennachetti.

"It’s one or the other."

Comments prepared by Slack and Cote said Toronto’s mix of municipal spending has changed, with transportation increasing its share over a decade while social and family services have declined.

Toronto’s debt "is relatively modest and manageable" for a growing city, they said, while the property tax burden for each household has actually fallen. "Toronto residents, on average, pay low property taxes compared with residents of other Ontario cities."

Leading mayoral candidates, including Ford, have said they want to hold residential property tax increases to around the inflation rate or lower.

Those who support the Bloor-Danforth subway extension into Scarborough, which requires a special tax levy, do not seem to include it in this pledge.

In a release, Ford said the report makes some interesting points.

"They note that under my watch Toronto’s finances are strong and sound. They found that the City of Toronto is managing its spending levels, we are keeping our debt in check and most importantly, under my administration, the City of Toronto is not over taxing its residents," the mayor said.

"The reality is, my administration brought the City of Toronto back from the edge of a fiscal cliff."

Ford added that, "While we have slowed down the out of control spending to keep taxes low and keep our city affordable, I still firmly believe that there are millions of dollars in further waste and efficiencies that we can find."

A spokesperson for mayoral candidate Olivia Chow, Jamey Heath, said Chow agrees the city has an infrastructure deficit. "That’s why Olivia has spoken about the urgent need for the federal and provincial governments to invest in transit, housing as well as the Gardiner (Expressway). The fact is we only keep eight per cent of the tax the city generates. Ottawa and Queens Park get 92 per cent, yet deliver no support at all for TTC operating costs or TCHC repairs."

"Clearly we have an infrastructure deficit, and will need to think about long term solutions," responded another candidate, Karen Stintz.

"The other levels of government must do their part, but the city can’t always be running cap-in-hand (to them for assistance). That is why I’ve proposed establishing a new trust with real money for transportation projects."