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Chaos ruled at Toronto City Hall yesterday as a council budget debate deteriorated into a series of racial slurs, name-calling and threats of lawsuits.

Rookie Councillor Rob Ford heated up the meeting when other councillors said they heard him call Councillor George Mammoliti a "Gino-boy," which the Italian-Canadian politician said was a racial slur against him and the city's huge Italian population. It is one of the worst insults for an Italian-Canadian, he told reporters.

"I heard it in school," Mr. Mammoliti said. "Hearing it at city hall shocks me."

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He demanded a retraction but was told to forget it.

"I never said it, so I'm not retracting anything," Mr. Ford, the controversial and highly excitable councillor from Etobicoke, told council in public session.

Mr. Mammoliti later filed a formal complaint with the city's human-rights office.

The animosity that flared between the two politicians was a carryover from Monday's council meeting, when Mr. Mammoliti called Mr. Ford a goon and Mr. Ford accused Mr. Mammoliti of being a scammer.

Because neither councillor had activated the microphones on his desk at the time, yesterday's exchange and the disputed epithet were not recorded.

Two councillors said they heard Mr. Ford make the remark.

Councillor Suzan Hall who sits two chairs away from Mr. Ford and directly behind Mr. Mammoliti, stood up and told the council: "He said it. I heard it."

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In fact, Mr. Ford allegedly made the slur twice. It was the second occasion that Councillor Maria Augimeri, who sits directly across from Mr. Ford but several seats away, said she had overheard.

She said in an interview that Mr. Mammoliti asked Mr. Ford to repeat what he had said and he did.

Mr. Mammoliti gave reporters the following account of what led up to the offensive remark.

"He [Mr. Ford]had applauded Councillor Raymond Cho for turning down a trip to Asia and turned to me directly and said that I should do the same. . . . I defended my position and said: 'I'm not going anywhere so I don't know why you're making these comments.'

"He proceeded to call me a tough guy and I told him: 'This tough guy sits on 19 committees compared to your seven. I'm working in this place. What are you doing?'

"He then turned around and called me a Gino-boy."

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After the exchange, Mr. Ford told reporters that the three councillors were liars if they said he made a racist remark. He painted himself as the victim of a left-wing conspiracy, which his accusers dismissed as laughable.

"I'm a conservative, and the majority of people are left-wing and cannot stand my politics," Mr. Ford said.

Sweating profusely as he stood in front of reporters, he denied being a racist and berated Mr. Mammoliti, accusing him of abusing taxpayers' money by travelling all over the world on city junkets.

Both men said they were going to talk with their lawyers.

A Toronto Sun columnist may also be consulting a lawyer about Mr. Mammoliti.

After refusing to answer a question posed by Sue-Ann Levy, one of many reporters interviewing the councillor, he told her to be careful what she wrote about him because he was going to be watching her every word and he was going to talk with his lawyer about her.

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Mr. Lastman spent a quiet day in council chambers, remaining detached from the shenanigans taking place in front of him and leaving it to others to try to restore order.

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