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Toronto Mayor John Tory, right, and Ontario Premier Kathleen Wynne shake hands in Toronto on Jan. 30, 2017.Chris Young/The Canadian Press

After more than three decades as a civil servant, Toronto city manager Peter Wallace speaks fluent bureaucratese. Still, there was no mistaking his meaning when he told Mayor John Tory and city council this week that "there remains a structural gap between council's service level and investment expectations compared to the rate of growth in base revenues." In other words: The money you bring in doesn't begin to match what you need for all the things you want.

It is a message he has been driving home almost since he took over as the city's top unelected official in May, 2015, after holding top posts in the provincial government. At committee after committee, in meeting after meeting, in report after report, he has told his elected masters that their ambitions exceed their means.

The city has big plans to build out its inadequate transit system, repair crumbling public housing, create new public parks and do a score of other worthwhile things to help handle its galloping growth. The take from property taxes, its main source of revenue, just isn't sufficient, and council hasn't been willing to raise taxes enough to meet the need.

As Mr. Wallace told councillors, there is "a yawning gap between what you promised and what you're willing to fund." Unless they are willing to change, he said, they had better be ready to scrap some of those expensive projects.

Late last year, after listening to him read the riot act over and over, they finally took heed. Mr. Tory said he would do something that no mayor since the creation of the modern city in 1998 had dared: slap tolls on two city highways, the Don Valley Parkway and the Gardiner Expressway. Mr. Wallace endorsed the idea. City council overcame its usual reluctance to choose new "revenue tools" and voted yes. In a political system that often seems unable to make big, or sensible, decisions, it was a small miracle.

We all know what happened next. Premier Kathleen Wynne pulled the rug out. After indicating she would let the city go ahead, she turned around and told Mr. Tory that, sorry, he could not have his road tolls after all.

The Premier's about-face leaves Toronto in a real fix. Before settling on tolls, city hall considered a bunch of other ways of raising money. Selling Toronto Hydro was a no go – too many city councillors were opposed to giving up such a key asset. Putting a tax on parking spaces seemed tempting for a while, but implementation would have been too cumbersome and complex to make it worth the effort. A city sales tax was never an option – Queen's Park wouldn't have it. A hotel tax is doable but won't bring in much money.

City hall could just increase property taxes, of course, except that when Mr. Tory ran for office he promised not to raise them more than the rate of inflation and has repeated that promise many times since. Mr. Wallace doesn't see much hope there. As he puts it in his memo, "city council has been clear it is not comfortable with increased access to the property tax base."

He says the new gas-tax revenue that Toronto will get from the province is welcome, but it's not as good as toll revenues because it's harder to use as backing when the city borrows money. The land-transfer tax that has brought the city so many millions through the real-estate boom is only as reliable as the market.

Mr. Wallace is a smart, principled, hard-working guy – and a demon cross-country skier in his free time. To his credit, he has been outspoken, even blunt, with the politicians about the city's predicament – something not every civil servant would try. He put a lot of energy into persuading the mayor and city councillors to get real. By acting on tolls, they did. Now this. What a shame to see the bold decision he helped bring about overturned.

The memo he sent around on Tuesday amounts to a long sigh of frustration. Thanks to Ms. Wynne, city hall is right back where it started: Too many needs, not enough money.

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