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A report by Toronto city staff deals a blow to Mayor John Tory’s transit plan.Fred Lum/The Globe and Mail

Toronto Mayor John Tory's signature transit proposal can't be funded without a new source of revenue, city staff have concluded, and even the pared-down version he is now touting will take years longer than he promised.

A long-awaited Toronto staff report into a host of transit projects undercuts more of Mr. Tory's pitch for what he calls Smart Track. And it recommends that Toronto shoulder substantial new transit costs that many had long assumed would be paid for by the province.

The report will be discussed Tuesday at a special meeting of executive committee, with the mayor touting it as a key step forward for the city.

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"After years of talk, indecision and delay, we are actually getting on with building the transit Toronto residents so badly need," Mr. Tory said in a statement issued by his office.

The report notes, though, that the money to build Smart Track will be needed through 2026, indicating that the plan will take 12 years to build. Mr. Tory had promised seven years to finish the project, a discrepancy he glossed over in his statement.

"In half the time it takes to build a subway, Smart Track will offer a new commuter transit service in Toronto."

The report from staff moves forward a package of $7-billion in transit projects. But this progress comes at a price to the city. After negotiations with the province, staff are recommending that Toronto agree to pay to operate future light-rail lines in the city, an annual cost likely to be around $100-million.

"We've basically given in to everything the province has ever wanted from us, in order to be able to name a few stations after John Tory's campaign pledge," said Councillor Gord Perks.

"If you track the change in language since Mayor John Tory was elected, the things that the province was prepared to pay for is smaller and smaller and the things the city has to pay for get bigger and bigger. And all of this for something that doesn't look remotely like what the mayor campaigned on."

TTC Chair and Councillor Josh Colle acknowledged the difficulty of finding these funds but said it was part of the cost of expanding the transit system.

"I think the honest conversation that has to happen is about how do we fund the services that we provide in this city," Mr. Colle said. "If we want these things, then citizens and councillors have to be willing to take steps to pay for them."

On the campaign trail in 2014, Mr. Tory promised additional service on existing GO rail lines in the city, plus a new connection along Eglinton Avenue West to the airport area. He said it could be done in seven years and that the city would not need to raise taxes to pay its share. He dismissed critics and those who raised questions as negativists and promised repeatedly that he would "get it done."

Since then, though, elements of the Smart Track plan have been chipped away. It gradually became clear that it is little more than the existing provincial plan to increase GO rail service.

The Eglinton connection would require extensive tunnelling, at huge cost, and is now expected to be replaced with a light-rail extension of the Crosstown line. The 13 new stations Mr. Tory said it would include have been whittled down to six, though that number rises if the new LRT stops are counted as well.

On Monday, the plan suffered two more hits.

City staff said that tax increment financing (TIF) – which Mr. Tory assured the public would be enough to pay for the city's share, thus eliminating the need for a tax increase – would not be enough.

"Even if the full forecast incremental tax revenues are applied to repayment of the debt, a tax increase of 2.1 per cent is projected to be necessary in order to fund the early shortfalls," the report from the city manager reads. "Assuming a more conservative allocation of 50 per cent of TIF revenue, a tax increase of 3.0 per cent is projected."

In a not-for-attribution technical briefing, senior city staff said that the money could come from sources other than a property-tax increase – asset sales, for example – and specified that the money would be needed particularly for a three-year period early in the next decade.

These figures assume that the cost of the city's share of the project can be reduced to around $2-billion. To do this, the federal government would have to kick in $1.24-billion and Mississauga and the Greater Toronto Airport Authority would have to put in $470-million.

"It's built on a very shaky foundation of a very – ethereal is the word that comes to mind – set of assumptions about who's going to be paying for what and where the financing's coming from," Councillor Janet Davis said.

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