Toronto Mayor John Tory says he supports the idea of taking out a provincial loan to balance the city's budget – which could leave the city on the hook for $25-million a year in payments – describing the situation as "the best we could do."
Mr. Tory unveiled his budget proposal this week, which assumes $86-million in funding from the province in order to plug a gap created by cuts to provincial funding last year. In response, the province issued a statement Tuesday saying it would not restore the funding, but would offer a one-time, $200-million line of credit to the city.
That loan, offered at market rates, would leave the city on the hook for an estimated $25-million payment for the first year alone – although those terms are still being negotiated, the mayor's spokeswoman Amanda Galbraith said Wednesday.
It is not clear where that money would come from.
"What we tried to do was the best we could for cushioning that blow for the City of Toronto," the mayor said.
"On the one hand, I'm disappointed that the support isn't going to be continued. But at the same time, I'm grateful that there has been something done to cushion the blow for taxpayers."
The proposal comes amid exhaustive and ongoing back-and-forth between the city and Queen's Park over the province's sudden cancellation of a $129-million fund for Toronto that the province began phasing out last year.
A source familiar with those discussions said the talks included at one point a suggestion by provincial officials for the city to sell off some of its land – a suggestion that was quickly rejected, the source said.
And while the mayor acknowledged Wednesday that the arrangement is less than ideal – telling reporters "we are where we are, and we did the best we could" – he rejected the notion that it is a risky move. He also rejected the notion that borrowing money to balance the books – which the city by law is required to do – is an unusual step to take.
"I think people will see, and I think they trust in me to be financially responsible," he said. "I wouldn't do anything that wasn't financially responsible. I would only look back to many previous instances in which there have been loans extended through the province to the city of Toronto. It's part of doing business."