Toronto doesn’t have a revenue problem or a spending problem; we have a whole lot of services that we soon won’t be able to afford. And no one’s campaigning on how to fix that.
While speaking candidly to a university audience earlier this month, Toronto city manager Joe Pennachetti outlined some emergencies on the horizon. In the next few years, without an injection of hundreds of millions of dollars, social-housing tenants may have to be evicted as their residences crumble around them. This is a shocking claim, and yet the remarks have only been reported, to my knowledge, by Torontoist. In a phone call earlier this week, Pennachetti says he regrets using the word “evicted,” but that “health and safety issues” would indeed result in having to close units.
The numbers in Pennachetti’s presentation are stark: The cost of public-housing repairs has risen by $200 million over the past four years, and over the next decade, the total is expected to reach almost $3 billion. Meanwhile, our transit system faces a similar repair emergency, with more than $2.6 billion needed over the next decade just to maintain the current network. Pennachetti says the city needs another $500 million per year to cover these two obligations—and suggests funding should come largely from the province and the federal government.
You would think that, in the midst of overlapping municipal and provincial election campaigns (plus a couple federal by-elections in T.O.), we’d be hearing more about these impending crises. Instead, most politicians seeking any sort of office here at the moment are fixated on promises to build new transit and to cut or maintain tax levels.
It’s hard to argue against the need to build new transit—our city is growing and prospering so fast that it’s creating transportation overloads. (The silver lining in the city manager’s talk was an outline of the many ways in which Toronto is thriving.) Yet while that success creates a need to expand, we should also be very focused on maintaining the systems we have, ones that have been mostly neglected since at least 1998.
That’s when, as Pennachetti explained to U of T’s Munk School, the provincial government left the city to single-handedly shoulder the costs of public transit and public housing—things no other city in the world is expected to do with its local property tax base. Pennachetti says that those burdens leave Toronto with an annual operating “structural deficit” of over $300 million.
In the case of social housing, this is actually getting worse. As of next year, about $260 million in federal and provincial funding will be withdrawn. And while funding drops and the repair backlog enters the stratosphere, the waiting list has grown such that there are twice as many people on it as there are units in the system.
It doesn’t help matters that, since 2004, Toronto has seen property taxes rise by an average of 1.8 per cent per year, well below inflation, even as neighbouring municipalities have seen increases more than twice as high over the same period. Still, higher property taxes alone don’t appear to be a particularly tenable option: To generate the half-billion dollars Pennachetti says we need annually, we’d have to raise rates by roughly 20 per cent. And that’s just to avert a crisis.
Pennachetti has been specific about how he’d like to address the revenue problem. He wants the province to pay half of the TTC’s operating costs, and for both the federal and provincial governments to write nine- or 10-digit one-time cheques to clear the capital backlog. He also says the province needs to provide—either through a share of the HST or through direct transfers—another $500 million per year to the city. And he says we need to raise property taxes every year in the near future by more than the rate of inflation.
City council has outlined a strategic plan for the future that specifically prioritizes affordable housing and transit. But politicians aren’t giving us the strategic plans to fund those priorities. The equation isn’t difficult to grasp: If we don’t get more money to pay for the services we provide, we’re going to need to cancel a lot of them. And soon.
There may be people in this city who’d argue we should stop providing social housing, or shrink the TTC, or slash public services. But that argument isn’t being put forward by mainstream candidates at any level. Instead, most leading candidates for mayor and premier talk about finding efficiencies and keeping taxes in line with inflation. Mayor Rob Ford and others who still talk about the gravy train and eliminating waste have heard the city manager’s response: He says the fat has already been cut.
Pennachetti is likely to retire soon as the head of Toronto’s civil service, and has been increasingly blunt in outlining the real numbers facing the city. While it’s great to have some straight talk from a guy helping to run the government, some more of that from those looking to become the government would be even better.