Toronto Mayor Rob Ford has formally asked the city manager for a two-year property-tax freeze starting in 2014, the year he stands for re-election, The Globe and Mail has learned.
In his budget guidance letter to Joe Pennachetti, the mayor instructed Toronto’s top bureaucrat to prepare a three-year budget plan that holds the 2013 residential property-tax increase to 1.75 per cent or less and freezes it in 2014 and 2015.
The letter, which was hand-delivered Thursday to Mr. Pennachetti and members of the executive and budget committees, comes as council prepares to vote next week on studying the OneCity transit plan – a proposal from TTC chair Karen Stintz and TTC vice-chair Glenn De Baeremaeker that would use a “current-value assessment uplift” to significantly increase property taxes to fund 170 kilometres of new subway, bus and streetcar lines.
Mr. Ford has made no secret of his disdain for the OneCity funding model.
The timing of his budget guidance letter only reinforces his desire to hold the line on Toronto’s residential property-tax rates, already the lowest in the Greater Toronto Area.
“We will adopt a philosophy that tax rate increases are the last resort, never the first choice – and, if approved, tax increases should normally be used to enhance the service benefit residents receive,” says the letter, a copy of which was obtained by The Globe and Mail.
The final letter is virtually unchanged from a draft The Globe obtained in April.
Asked about the proposed property-tax freeze at that time, Mr. Ford hedged, saying he “never campaigned on that …We were very fortunate to come out with a zero-per-cent tax increase [in 2011], very fortunate that next year we might be able to hold the line on taxes. I’m not quite sure. This is just the beginning of the budget process.”
However, the final letter, signed by Mr. Ford, shows the mayor has settled on promoting a freeze for 2014 and 2015.
The only major difference is that the earlier copy floated freezing business property-tax rates beginning in 2013.
The new version asks for a cap to the business-rate increase of 0.58 per cent, the traditional one-third of a 1.75-per-cent residential rate hike.
Like the draft, the budget guidance letter calls for building new arenas, pools and community centres in partnership with the private sector; freezing solid waste rates; and ending annual 9-per-cent water rate hikes as scheduled at the end of 2014.
It makes no mention of reducing or killing the land-transfer tax, which the Toronto Real Estate Board on Thursday blamed for a 5.4-per-cent drop in Toronto home sales in June and which Mr. Ford campaigned on scrapping.
There is no guarantee that Mr. Pennachetti and city finance staff will follow Mr. Ford’s instructions. The letter contains advice, not orders.
There’s even less of a guarantee that council would adopt a property-tax freeze as it did in 2011, Mr. Ford’s first full year in office.
Council has since rebelled against Mr. Ford on a slew of issues, and many councillors have expressed reservations in the past about freezing property taxes.
Municipal finance expert Enid Slack warned that holding the line on taxes could put the city in a difficult financial bind.
“I don’t think a property-tax freeze is a good idea because the city’s costs go up every year, at least by the cost of inflation but probably more,” said Dr. Slack, director of the Institute on Municipal Finance and Governance at the University of Toronto’s Munk Centre. “By freezing the property tax you’re constraining the budget.”
The OneCity plan’s current-value assessment uplift model work out to a 1.9 per cent increase to property taxes for four years, after which the increase would level off and continue at that rate for 30 years.
That would be over and above regular property tax increases, the kind Mr. Ford wants to halt in 2014 and 2015.
“I can’t support taxing the hard-working residents of this city for that transit plan,” he told reporters after a tour of a Toronto Community Housing Corp. building Thursday with the agency’s new chief executive officer.
Earlier in the day, members of the mayor’s staff met with Ms. Stintz and Mr. De Baeremaeker to discuss the language of OneCity motions expected to go to council next week.
Ms. Stintz said Thursday that she is “confident” she can drum up enough votes to get approval for the OneCity study, which would come back to council in October.
“People have some questions. It’s important that we answer them,” she said of her council colleagues, many of whom were caught off-guard when she and Mr. De Baeremaeker unveiled their ambitious pitch last week.
“We talked to our colleagues, but there is a sense that we didn’t provide enough detail. We learned from that,” Ms. Stintz said.
With reports from Jane Switzer