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David Miller is not back in the running, but that doesn't mean he is staying out of the race.

The outgoing mayor inserted himself squarely into the campaign Wednesday with a much-hyped news conference announcing the city has found an extra $104.82-million in surplus cash, a quarter of which he would use to whittle down this year's residential tax increase to 2.9 per cent from 4 per cent.

The mayor also waded into his successor's budget, pledging $75-million for a 2011 property-tax stabilization fund. Socking that money away, Mr. Miller said, would allow Toronto to balance next year's budget without raising TTC fares or hiking taxes by more than 3 per cent - so long as the province comes through with $250-million in operating funds for the Toronto Transit Commission.

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"The reality governments face today is [they]are running deficits. The city of Toronto is running a surplus," he said. "I think that's unalloyed good news."

The mayor's sunny take was immediately overshadowed by critics who questioned how city finance staff unearthed an additional $104.82-million less than a month after presenting a $9.2-billion budget proposal that already included a $250-million surplus from 2009.

"I think [the]process is a sham," said George Smitherman, the front-running mayoralty candidate and former deputy premier. "The citizens of Toronto have been put through the emotional turmoil of proposed reductions in services and increases in fees only to find, mysteriously, in some drawer or envelope somewhere, resources that change the picture."

Kevin Sack, a spokesman for the city, said the extra millions came largely from higher-than-expected returns on the city's investments and from winning more property assessment appeals than expected.

Finalizing figures from the previous year at this stage in the budget dance is routine, as is the city turning a modest surplus. The surpluses in 2008 and 2007 were $74-million and $95.1-million, respectively.

It is not routine, however, for a surplus to be so large or rolled out with such fanfare.

Rather than reveal it at a low-key budget committee meeting, Mr. Miller trumpeted the surplus to dozens of journalistslured to his office by a cryptic press release.

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Deputy Mayor Joe Pantalone, who is running to replace Mr. Miller, was at his side, as was budget chief Shelley Carroll, a reputed candidate who reiterated Wednesday that she won't run.

She chuckled when asked about the ploy: "As to how cute it was, I have no control over the mayor's staff and that's who printed up that little media release."

Mr. Miller's methods suggest he's keen to burnish his legacy and counter mayoralty candidates who've accused him of being irresponsible with taxpayers' money. Mr. Smitherman and Rocco Rossi, the federal Liberals' former fundraising chief, have both made further privatizing or outsourcing city services part of their early campaigns.

"If people want to slash and privatize it's because of their own ideology or political opinion," Mr. Miller said. "There is no financial reason to do that whatsoever."

His plan for the extra surplus - which also includes reducing the commercial tax increase to less than 1 per cent from 1.33 per cent - sets the stage for a heated budget meeting on Friday.

The committee was already preparing to deal with dozens of motions from councillors who wanted proposed user fees reduced and more money allocated for childcare, libraries, community service grants and other areas. Now, those councillors know there's extra money up for grabs.

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"The issue between now and the budget committee [meeting]Friday is whether some of the money can go to some of these requests," said Councillor Joe Mihevc, a member of the committee. "Each of us has different priorities. Mine tend to be around community grants and the arts and student nutrition and daycare."

With a report from Anna Mehler Paperny

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Health reporter

Kelly Grant is a health reporter with The Globe and Mail. More

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