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Toronto Mayor Olivia Chow attends a news conference with Ontario Premier Doug Ford in Toronto on Nov. 27, 2023.Chris Young/The Canadian Press

Toronto City Council approved a 9.5-per-cent property-tax increase, the largest hike in a quarter century, finalizing a $17-billion budget that Mayor Olivia Chow calls a first step in reversing the city’s decline.

The tax hike, bigger than any since the city’s amalgamation in 1998, was opposed by councillors to the mayor’s right, who argued that residents were already struggling with inflation, high mortgage payments and rents, and called on the city to reduce its costs instead. The increase passed by a vote of 18-8.

Toronto’s hike follows steep property-tax increases in large cities across the country, including in Vancouver and Halifax, as municipal leaders grapple with increasing expenditures and the continuing financial impact of the pandemic.

The 9.5-per-cent hike means that the average Toronto household will pay just under a dollar more a day, city officials say, as the municipal government digs itself out of a financial hole that had it projecting a $1.8-billion shortfall for this year when the budget process began. By law, the city cannot run a deficit.

Wednesday’s tax hike was somewhat overshadowed by drama around Ms. Chow’s move to reverse course and further increase the $1.2-billion police budget by another $12.6-million, a manoeuvre opposed by some activists in the city. Five of Ms. Chow’s left-leaning allies on council voted against the amendment to increase police funding. A protester who yelled “Shame!” as the mayor addressed council on the topic was removed from the chamber by security.

While she has won recent cash infusions from Ottawa and Queen’s Park – which is taking on billions in costs for the city’s Don Valley Parkway and Gardiner Expressway – Ms. Chow says the tax hike was still necessary. And she stands by her campaign pledge that it would be “modest” – even though critics point out that it is far above the national rate of inflation, pegged at 3.4 per cent in December.

In an interview with The Globe and Mail Wednesday, Ms. Chow, a former councillor and New Democratic MP, said the city had kept tax increases low in past years by draining its reserve funds, skimping on services and deferring repairs and maintenance.

“I’m an immigrant kid, working class. You pay for what you spend. You don’t raid your savings accounts, because rainy days can happen,” Ms. Chow said. “I looked at the reserve funds – there’s not a lot left.”

She said Torontonians will see an immediate difference in exchange for the tax increase, including through a $50-million fund aimed at fixing visible signs of the city’s decay such as shuttered public washrooms, broken water fountains and dirty sidewalks.

“This is a budget to get the city back on track and start the journey to build a city that’s more caring, more affordable, safer,” Ms. Chow said, highlighting budget provisions to increase staff in libraries and transit stations.

City officials have the task of coming up with a plan by July on how to reallocate the $1.9-billion in capital spending the city expects to save from relieving itself of responsibility for the Gardiner Expressway over the coming years.

This is Ms. Chow’s first budget since winning election last year. She would not speculate on next year’s property-tax hike, saying it depends on whether senior levels of government support cities – and how coming contract talks with the city’s unions go.

She said the Federation of Canadian Municipalities will soon put forward a new plea for more funding to help cities across the country, but she would not reveal any details.

In conceding the extra money for police, Ms. Chow said she expected lagging 911 response times to improve.

Police Chief Myron Demkiw and the Toronto Police Association, which represents front-line officers, had launched a public campaign and backroom lobbying push in recent weeks, saying the extra $12.6-million beyond what Ms. Chow had offered was needed to bring in enough new recruits to replace retiring officers.

In an about-face just before Wednesday’s budget debate, Ms. Chow agreed that the additional $12.6-millon could instead be drawn for now from the city’s reserves, as she expected more money for police to come from both provincial and federal governments to offset the cost.

She said she recently spoke with federal Public Safety Minister Dominic LeBlanc and that she expects police to receive funding from the $121-million Ottawa recently provided Ontario to battle auto theft. And she said talks with provincial and federal officials, as part of the new deal she secured on funding with Premier Doug Ford last year, are continuing.

Left-leaning Councillor Gord Perks was among the Chow allies voting against the police increase, saying the force had wrongly used public resources to campaign for its budget increase. Chief Demkiw had pleaded for the cash in a video released on a police social-media account.

Speaking to The Globe, Ms. Chow said she had made changes that many critics of police support, including installing more red-light cameras, hiring civilian traffic wardens and expanding the city’s new non-police crisis-response service for people in mental-health distress.

Studies have shown that Toronto’s property-tax rate is low compared with many other cities. This year’s 9.5-per-cent increase consists of an 8-per-cent hike to the base tax rate, with a regular 1.5-per-cent boost that goes to Toronto’s city building fund, a pot earmarked for public transit and housing. Last year, under then-mayor John Tory, the city raised the base rate by 5.5 per cent, for a total 7-per-cent hike with the building fund included.

Ms. Chow had initially warned of a 16.5-per-cent hike if the federal government did not come through with funding for refugees in the city’s shelter system, but yielded earlier this month when Ottawa pledged an additional $143-million.

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