Toronto budget debate opens with 2.5% tax hike

The City of Toronto needs to increase residential property taxes by 2.5 per cent in 2014 to help pay its share of the Scarborough subway, finance staff say.

The increase — equal to $64 on the average home assessed at $498,000 — is more than the 1.75 per cent that Mayor Rob Ford had held out as his maximum 11 months ago — before the plan to build the Scarborough subway added millions to the city’s requirements.

Ford was irate after finance officials launched the 2014 budget deliberations on a proposed operating budget of $9.6 million, up from $9.4 billion last year.

Of the proposed 2.5 per cent tax hike, 1.4 per cent goes to inflation; 0.6 per cent to enhanced services; and 0.5 per cent to fund the subway, which also requires $745 million in borrowed funds.

In dollar terms, the subway championed by Ford makes up $13 of the $64 average tax increase.

Ford left the budget committee meeting, telling reporters he had been assured that the subway costs could be met within a 1.75 per cent tax increase.

That would have been less than the 2 per cent increase approved for this year and the 2.5 per cent hike levied in 2012.

Ford claimed the bureaucracy has changed since the mayor’s powers were reduced by council this month.

“It’s so disappointing that in five days, as soon as they reduced my powers, all they’re doing is going back to the old tax-and-spend ways, getting back on the gravy train and spending and spending and spending and spending,” Ford said.

“It’s embarrassing that people of this city have to pay over 2.5 per cent in property taxes when we had it locked in at one and three-quarters. That is absolutely atrocious. And I will not be supporting this budget, I can guarantee it.”

Ford said he also believed the property tax increase could be set at 1.75 per cent and still cut land transfer tax revenues by 10 per cent, or about $35 million in 2014.

Ford said city manager Joe Pennachetti gave him that assurance. However, asked in budget committee by Councillor Gord Perks if that was so, Pennachetti said no.

Deputy Mayor Norm Kelly, who took over powers removed from Ford, issued a statement recognizing Ford’s achievements during his first three years in office.

Kell said the staff’s budget recommendations were crafted by “a very capable team” led by Pennachetti, chief financial officer Rob Rossini and financial planning director Josie La Vita.

The proposed budget goes to public hearings next month, will be reviewed by council’s executive committee Jan. 22 and go on to city council for final approval Jan. 29 and 30.