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February 14, 2006
Toronto Budget Advisory Committee cuts $117 million from services to pay for rising costs of provincial programs
Toronto City Councillors were briefed today on the $117 million in cuts from services that will pay just part of the rising costs of delivering provincially required programs.

In reviewing the budgets of all City programs and agencies, boards and commissions, the committee imposed a hiring freeze and deferred many important projects that are needed to maintain Toronto’s quality of life and manage the city’s growth. The cuts made to the city budget are needed to pay for programs that are required by the province but not adequately funded.

While the City continues to find ways to address the budget shortfall, there remains an ongoing financial issue that needs to be resolved. There are no cuts available to the City to meet the shortfall, now pegged at $ 414 million. To meet a shortfall of this kind would require the elimination of entire service areas. For example, if the City did not use property tax dollars to make up the shortfall in provincial funding for the Ontario Works program more than 60,000 Toronto residents would be left without access to benefits. The same is true from Emergency Medical Services (EMS) where property tax dollars are used to make up for provincial underfunding of staff salaries. The City is required to make up provincial funding shortfalls directly from property taxes to ensure that access to service is maintained.

“These cuts would not be necessary if the province paid its bills,” said Councillor David Soknacki, Chair of the Committee. “The City has done its part - it’s time for the province to take back their funding responsibilities and let the City balance its books,” said Soknacki.

“Toronto’s property taxes should be going to fund City services, not provincially downloaded programs,” said Toronto Mayor David Miller. “The province has access to income and sales taxes while the City is limited to property taxes as a source of revenue. Toronto residents should not have to pay for provincial services again through their property taxes. Any necessary increases in user fees or taxes should pay for City services, not the programs that were downloaded to Toronto by the previous provincial government,” said Miller.

The cost of such programs, particularly the cost of paying for the Ontario Disability and Drug Benefit ($167 million) and the underfunded costs of providing provincial social services ($59 million), has had significant impact on City services. The absence of provincial funding for transit operations, which was cost-shared prior to amalgamation, now costs the City an additional $180 million per year. Gas tax funding from the federal and provincial governments has helped the City maintain capital equipment - not the day-to-day operations of the transit system.

Mayor Miller has recommended a five-year plan to the province to finally resolve what has become an unsustainable fiscal issue. The plan would see Toronto freeze spending for two years while the province would:

• resume funding of the social assistance and drug benefit programs that were downloaded to Toronto
• resume the shared operating budget funding that was provided to the TTC
• provide the city with revenues that grow with the economy.

More than 60 per cent of the property taxes paid by average homeowners go toward providing critical City services such as police, fire, emergency medical services, the TTC, garbage collection and recycling, libraries, parks and roads. However, property taxpayers are still required to pay for programs that were downloaded by the Province without adequate funding. Provincial programs such as social housing, disability payments and other income support programs make up about 35 per cent of costs to be funded by the property tax base. The City of Toronto, like other major municipalities, believes that such programs should be properly supported by the Province through income tax.

Media contacts:

Don Wanagas
Communications Director
Office of Mayor David Miller

Kevin Sack
Corporate Communications and Media Services



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