City of Toronto: $1.42-billion gap in the operating budget is just five years away prompting the city manager to say council must do one three things: cut services, maintain the status quo with modest increases, or raise big revenue to engage in city building

Mayor John Tory’s executive committee has ignored pleas to bring a key report on the city’s long-term financial future before council.

The long-awaited report from outgoing City Manager Peter Wallace explains the pitfalls ahead — including a $1.42-billion gap in the operating budget in just five years — and a partial roadmap for the way out.

After it was delayed by a year, the report was presented to executive committee with a recommendation that the new city manager come back with an actionable vision.

But despite members of the public and outside councillors asking it be considered by council as a whole — and promises from staff in December 2016 that it would be considered by council “well in advance of 2018 budget decisions” — executive committee members voted to support a motion from Tory that will see staff returning with a plan in 2019.

It is unlikely an implementation plan would have any impact before a 2020 budget, when the operating gap is expected to grow to $730 million. By law, the city must approve a balanced budget. Council can also not direct action in a new term, so the future of that plan is unclear.

“I do think this report should be forwarded to the governing body of this corporation. It contains, yet again, another analysis of the fiscal frailty of this city,” said Councillor Janet Davis, who said she asked members of the executive to support sending the item to council, but none agreed.

“I feel insulted, frankly, after four years in this term of council, that I have not been given the obligation to engage in this report and to have my community know how I stand on these very items before an election,” she said.

The municipal election is set for Oct. 22.

The item was discussed in the Scarborough Civic Centre’s council chamber on Monday. It was the first time the executive meeting has been moved from city hall in at least a decade, according to a review of public meeting minutes.

The sunken chamber was host to senior staff from several divisions who had made the trip to answer questions. Technical staff rigged up live-streaming equipment in the room. Someone brought coffee for a reception with the mayor.

During a presentation, Wallace outlined the challenges ahead without new revenue from taxes, fees or asset sales — making it difficult for council “to deliver on the vision” of plans approved to combat climate change, poverty and build out the city’s transit network.

He presented three possible futures: Cutting services to deal with a lack of revenue; maintaining the status quo with a “modest” increase in revenue, or engage in broader city building by raising substantial revenues.

The city needs $900 million over the next five years just to maintain existing service levels — to keep buses coming as often as they do now, maintain roads at the existing pace and keep libraries open at the current hours. That money would not allow for any expansion or new programs.

In the first hypothetical scenario, council would need to cut $900 million over five years to reduce the city’s financial footprint. In the last scenario — which includes doing the things council promised or has already committed to but not funded — they would need to raise over $1 billion over the next five years.

“This is not intended to be a panacea,” Wallace told executive members about his report generally.

This was Wallace’s last executive meeting after he was tapped by Prime Minister Justin Trudeau to become secretary of the Treasury Board.

About 10 members of the public who spoke on the item agreed the report should be up for debate at council.

Tory said it should be up to the next term of council to decide how to move forward, noting there are no recommendations for council to decide on now.

“This is a report that is, I think, intended to be a framework as opposed to a prescriptive set of measures that are meant to be taken forward for approval or not,” he said. “The last thing I think we need to do is actually to approve some sort of a plan that isn’t really a plan at the moment and then have council turn around and change it or reverse it.”

Budget chief Councillor Gary Crawford, in his speech, concluded: “We are in pretty good financial shape.”

For the last three years, Wallace has said council has put many important decisions off to a future date, relies too heavily on a hot housing market and faces a growing operating gap in just five years.
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