TTC lone bright spot for city's bottom line

City finance officials struggling to close a huge gap in the upcoming budget have at least one thing to celebrate: The TTC broke even in 2009.

Six months into last year, the transit agency was forecasting a $23-million loss, which formed part of the approximately $400-million shortfall projected for the whole city in 2010.

Instead, the TTC posted a modest $300,000 surplus. That's $23-million the city no longer has to find in deeper cuts or increased revenue for 2010.

"The TTC management really put their noses to the grindstone and had a bit of lady luck," said Councillor Joe Mihevc, vice-chair of the TTC and a member of the budget committee. "It's a great contribution and positions us better for this year."

Still, bad news is expected to outweigh good when the city unveils a nearly $9-billion 2010 operating budget Tuesday.

Higher user fees, layoffs and even selling the city's stake in Enwave are all under consideration as finance staff put the finishing touches on a budget that could be the toughest ever for Toronto to balance.

"It's more dire than it was last year," said Councillor Adrian Heaps, another member of the budget committee.

The city's structural deficit keeps growing. Reserves are bled nearly dry.

The recession drove up Toronto's welfare caseload. For every 1,000 people added to the rolls, the city pays out $2.5-million. (The Progressive Conservative government of Mike Harris downloaded part of welfare costs to cities; the current Liberal government has agreed to take some of those costs back, but slowly in Toronto's case.)

Toronto's average welfare caseload in 2009 was 88,506, up from 75,708 the year before. Fortunately, the city predicted welfare cases would soar and budgeted for 90,000 in 2009.

Much rests on 11th-hour talks with Queen's Park. The city is seeking stopgap funding from Dalton McGuinty's Liberal government, which has in years past helped cover Toronto's budget shortfall.

Last year, the province came through with $238-million, ostensibly for transit, but which the city used to plug its budget hole. This year, the province is grappling with its own $25-billion deficit, and is believed to be less keen to help the city.

Still, the discussions were ongoing yesterday, sources said.

City finance staff have fallback scenarios if Toronto receives less provincial money than it wants.

They've already had some success finding cuts.

Last fall, city manager Joe Pennachetti asked all the municipality's departments, agencies, boards and commissions to slash their budgets by 5 per cent this year and 5 per cent next. Mr. Mihevc said that although not all divisions met the target, many did or came close.

"The pain was shared," he said, adding the budget committee and staff strived to limit front-line service cuts and user-fee hikes.

Meanwhile, some arms-length agencies, including the police, actually requested budget increases.

There's no sign of a long-term solution to the city's structural deficit.

In fact, the Toronto Board of Trade is predicting that, left unchecked, the city's annual operating budget shortfall could grow to nearly $1.2-billion by 2019.

To forestall that, the city needs to make sweeping changes, said Carol Wilding, the board's president.

"This isn't [about]a tinker solution," she said. "It's a transformative solution."