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Mayor Rob Ford and city manager address provincial funding cuts

Jun 27, 2013 10:56:00 AM - thestar.com

Mayor Rob Ford vowed to make the province’s funding cutbacks an issue at the July 16 council meeting, and insisted he won’t drop plans to cut the land transfer tax by 10 per cent.

Ford has been blasting the province since last week over its decision to phase out a funding program — putting a $50 million hole in next year’s city budget.

To cushion the blow, the province said the city doesn’t have to repay a $200 million loan from the province. And the province notes the mayor could cancel plans to trim 10 per cent from the land transfer tax charged on the sale of real estate.

The city’s response is it never expected to repay the loan. And Ford flatly rejected the idea of keeping the land tax at its current rate, which brings in $345 million a year. He wants to reduce it by $34.5 million by lowering the rate.

Ford revealed he has instructed city manager Joe Pennachetti to prepare a “special report” on the issue for next month’s council meeting.

“They’re trying to force us to keep the land transfer tax (as is),” Ford told reporters at a news conference in his office Thursday.

Just days ago, Ford again promised in an address to the Toronto Real Estate Board that he wants to follow through on his 2010 election campaign commitment.

“I committed to doing (cutting) 10 per cent,” the mayor said. “Actually, I committed to getting ride of the whole thing — obviously that’s not going to happen.”

“So I said I’m going to do 10 per cent. And 10 per cent is achievable.”

Councillor Frank Di Giorgio, recently appointed budget chair by Ford, wasn’t so sure.

“I would say if the funds are available, I will support it (cutting land transfer tax),” Di Giorgio told reporters at the news conference. “I might have some pool of funds somewhere that are hiding somewhere, I don’t know.”

Pennachetti said the opening shortfall in the 2014 operating budget had been about $200 million and has grown to $250 million because of the provincial cutback.

Ford said the provincial funding goes to support city housing programs. Vulnerable people will be hurt because the city will lose $50 million next year.

Pennachetti agreed that housing cuts loom.

“It‘s a funding source that’s applicable to the housing program,” the city manager said. “So what we’re saying to the province is we’re going to have to make these cuts to the housing program.”

Money continues to be tight at city hall, and Pennachetti said city departments have been asked to flat-line their 2014 budgets.

Ford dismissed the contention that writing off the $200 million provincial loan gives the city more financial breathing room.

“The city stopped paying for this loan in 2005,” he said. “The province is well aware of that.”

The province, meanwhile, says it had insisted that the loan must be repaid.

Pennachetti said the city’s response to the province was the city can’t afford to repay the money.

The city paid back about $30 million but stopped in 2005.

“We didn’t make any payments, in accordance with our budgets, as directed by council,” Pennachetti said. “And we assumed at some point in time it would be written off. That’s what’s occurring now.”

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