Toronto is pleading for more than $1-billion in COVD-related financial aid from Ontario and the federal government to avoid draining a crucial reserve fund and leaving itself vulnerable to future shortfalls.
The requests from Deputy Mayor Jennifer McKelvie, who is performing the duties of mayor after the resignation of John Tory, were made public Monday in a pair of letters to federal Finance Minister Chrystia Freeland and provincial Finance Minister Peter Bethlenfalvy.
Ottawa and Queen’s Park are expected to table budgets in the coming weeks.
Ms. McKelvie urged Ottawa to come up with $423-million in pandemic-related funding for this year, as well as $235-million to cover a still-outstanding COVID-19 shortfall for 2022. Toronto also wants $171-million in federal money to cover shortfalls for both years in refugee and newcomer supports.
She urged the province to provide $423-million in COVID-related money and $87-million in public-health costs. She also asked the province to contribute $48-million for supportive housing and billions for the city’s plan to build affordable rental housing.
Both higher levels of government have provided cities with billions of dollars in special payments since the pandemic began. These stemmed from a recognition that COVID-19 had wreaked havoc on municipal finances and that cash-strapped cities needed to continue to provide services.
The shortfalls continued even as the pandemic began to recede. Lower-than-normal ridership on the Toronto Transit Commission is projected to leave the city $366-million short this year, and $350-million to $420-million shy in 2024.
By law, Toronto cannot run a deficit. It avoided that when passing the 2023 budget last month by provisionally including money that other governments had not actually promised to provide. If the money does not materialize, the city planned fill the gap with a backstop fund it has spent several years building.
But doing so would largely deplete the fund, leaving the city without that safety net in subsequent years.
Ms. McKelvie, who was not available for an interview Monday, said in response to e-mailed questions that this would be a perilous move.
“Our finance staff have been clear that going into our backstop is a one-time solution,” she said. “It’s a last resort and if we have to use it, there will be dire consequences on future budgets.”
Ms. McKelvie said in both letters, which varied little in their content, that “municipalities require a new fiscal framework” and that Toronto “cannot solve a structural problem with quick fixes and one-time funding.”
Mr. Bethlenfalvy told reporters at Queen’s Park that he wouldn’t disclose specifics in the coming March 23 provincial budget.
“We’ve worked very closely with the City of Toronto through the pandemic. We worked collaboratively, we’ve been there with the City of Toronto. We’ve delivered. We continue to have dialogue with the city,” said the Finance Minister.
He said he hadn’t discussed a new revenue financing structure with the city.
Ms. Freeland’s office did not provide an immediate response.
Mr. Tory had pledged to make a new fiscal arrangement for cities a centrepiece of his third term, which he won handily in October. Instead, he resigned last month after admitting to a lengthy affair with a staffer who had reported to him.
With a report from Laura Stone