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Toronto City Councillor Doug Ford spoke during a scrum outside Toronto City Hall Committee Room 1, on Jan. 9, 2012.

Toronto is on track for a $90-million surplus this year because of the cost-cutting measures taken by the Ford administration, the mayor's brother Doug Ford says.

"It's because of prudent fiscal management that we have the $90-million," the Etobicoke councillor told reporters Tuesday. "Anyone when we first got elected who said where's the gravy? We've proved in 18 months where the gravy is and there's barrels of gravy still down here."

The city spent about 10 per cent, or $70-million, less than expected in the first three months of this year, recently released budget numbers show. That was mostly because of one-time savings in labour costs and higher-than-expected revenue from land transfer taxes. By the end of 2012, staff expect the surplus to grow to $90-million.

News of the surplus prompted the city's budget chairman, Councillor Mike Del Grande, to suggest its time to begin phasing in a reduction of the city's land transfer tax starting next year. Mr. Del Grande also would like to freeze business property taxes at current levels.

Opponents of Mayor Rob Ford argue the surplus is proof that there is no need for the city to make drastic cuts to service.

"The sky is not falling," said Councillor Gord Perks, a frequent critic of the mayor. "We are in pretty good shape. We have a couple of challenges and we have to roll up our sleeves and deal with them."

Mr. Del Grande, who as budget chairman led last year's charge to close a funding gap originally estimated at more than $700-million, on Monday said he plans to push for a reduction of the land transfer tax in five-per-cent increments beginning next year, arguing that the city cannot continue to rely on a revenue source that is tied to the fortunes of the real estate market.

The tax, introduced when David Miller was mayor, brought in $17-million more than expected in the first quarter, at $66-million, and is forecast to generate $330-million by the end of the year, about 14 per cent more than budgeted.

Mr. Ford ran on a pledge to scrap the tax, but since coming to office has talked of phasing it out instead.

Mr. Del Grande estimates his 5-per-cent cut would reduce city revenue by between $15-million and $17-million annually.

But even that 5-per-cent cut would translate into a 1 per cent increase on homeowners' property tax bills, Mr. Perks said. Freezing business taxes together with the cost of inflation would add another 4 per cent to residential property taxes, he estimated.

"I think the land transfer tax has to stay unless Torontonians want to face massive property tax increases," he said.

Mayor Ford has said he'd like to hold tax increases below 2 per cent next year and freeze them after that.

Councillor Ford said scrapping the tax all at once is not in the cards, but a gradual reduction can be done. "I don't think we can afford to get rid of it in one shot [but]a little at a time," he said. "I'm in favour of getting rid of all taxes, as much as we can."

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