Every year, the City of Toronto faces a fresh $1-billion-plus shortfall in its operating budget, an issue its main mayoral contenders have all vowed to fix.
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contenders → face → budget
But experts say the city and other municipalities across Canada will be left perennially begging for cash without major changes to the way they are funded.
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they → say → way
Toronto’s budget hole – city bureaucrats prefer the term “opening pressure,” pegging this year’s at $1.3-billion – must be filled each year, as municipalities in Ontario cannot borrow to cover operating deficits.
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municipalities → prefer → deficits
The annual scramble usually ends with the use of tax hikes, reserve funds, spending reductions and varying amounts of financial support from Queen’s Park.
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scramble → end → Park
Mayor Olivia Chow – who took office in 2023, with a $1.8-billion gap looming for the following year – imposed two large property-tax hikes in a row, outpacing any others in recent memory.
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who → take → memory
However, she was also able to win a “new deal” with Premier Doug Ford that provided important financial relief.
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that → win → relief
Whoever assumes the mayor’s chair after the Oct. 26 municipal election will inevitably be seeking a New Deal 2.0 to shore up the city’s books.
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assumes → assume → books
Cities, as creatures of provincial legislation, have been set up across Canada with similar financial structural problems.
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Cities → set → problems
In Ontario, municipalities are in worse shape because they’re required to cover more of the costs of social programs that are delivered by the province in other jurisdictions.
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that → require → jurisdictions
In all, the annual bill to run Toronto has now hit $18.9-billion – more than several provinces spend.
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provinces → run → billion
“This is not a case of extravagant Toronto crying poor,” said Myer Siemiatycki, professor emeritus in the department of politics and public administration at Toronto Metropolitan University.
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Siemiatycki → cry → University
The problem, many experts and municipal leaders have argued over the years, is that municipalities largely rely on property taxes, which do not grow with the economy and inflation the way taxes on income do.
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taxes → argue → income
(They also don’t sag the same way in a recession.)
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They → sag → recession
Meanwhile, costs for Toronto and other municipalities – transit, homeless shelters, road repairs – often rise faster than the general rate of inflation, requiring hotly debated, highly visible property-tax rate hikes to keep up.
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costs → rise → hikes
In years past, the annual budget process has seen Toronto council twist itself in knots.
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council → see → knots
It has passed budgets that were only balanced with money still to come from other governments.
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that → pass → governments
It has resorted to arcane accounting tricks, such as selling all of its lamp posts to its own hydro utility in 2005 to raise $60-million.
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It → resort → million
In 2017, then-mayor John Tory had to renege on a social media pledge to Olympic swimming gold-medalist Penny Oleksiak to keep city-funded lessons at her childhood pool, an $85,000 line item.
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Tory → have → item
The deal that Ms. Chow struck with Mr. Ford provided a total of $1.2-billion over three years for operating costs, money that runs out this year and was enough to shrink, but not eliminate, the city’s annual budget shortfall.
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that → strike → shortfall
The province also agreed to take over two major expressways, the Gardiner Expressway and the Don Valley Parkway, taking billions of dollars of capital spending off the city’s books.
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province → agree → books
While they do not dispute the need for some sort of renewed deal with the province, Ms. Chow’s leading challengers in the upcoming election, city councillor Brad Bradford and former federal Conservative cabinet minister Chris Alexander, also accuse the sitting mayor, a former councillor and NDP MP, of not doing enough to contain spending.
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challengers → dispute → spending
They have taken aim at her first two years, when, despite pledging “modest” hikes, she oversaw residential tax-rate increases of 9.5 and 6.9 per cent.
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she → take → cent
That was just after her predecessor Mr. Tory had raised taxes by 7 per cent in 2023, as the city faced a pandemic-induced financial crisis amid high inflation.
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city → raise → inflation
But property-tax hikes cannot solve the problem.
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hikes → solve → problem
Every percentage point that Toronto increases property taxes means it takes in an added $49-million.
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it → increase → million
Filling a billion-dollar hole with just property taxes would mean a pitchfork-prompting rate hike of more than 20 per cent.
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Filling → fill → cent
Ms. Chow has said future hikes, if she is re-elected, would look more like this year’s hike of 2.2 per cent, and would be at or near inflation.
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she → say → inflation
Even with the increases, Torontonians’ property-tax burden remains lower than in several surrounding municipalities.
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burden → remain → municipalities
On average, according to 2025 figures compiled by the city that account for Toronto’s user-fee system for waste collection, Toronto households paid less property tax than those in Hamilton, Markham, Mississauga, Vaughan and Brampton.
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households → accord → Hamilton
(Most municipalities fund their garbage collection through property taxes, but not Toronto.)
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municipalities → fund → taxes
Part of the reason for discrepancy in tax bills is Toronto’s large commercial and industrial tax base, which has historically allowed it to keep residential taxes lower.
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it → allow → taxes
Both of her challengers have pledged to freeze property taxes in their first year in office, a move that might be popular but would add to – not reduce – the annual budget shortfall.
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that → pledge → shortfall
(In decades past, mayors Mel Lastman and Rob Ford made similar moves, but returned to increasing taxes as cost pressures mounted.)
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pressures → make → taxes
Mr. Bradford also says he would eliminate the city’s land-transfer tax on the first $1.1-million of a principal residence’s cost.
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he → say → cost
He says doing so would cost the city $300-million a year, potentially making that gap wider once again.
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gap → say → million
But he also has promised to launch an external “line-by-line” review of city spending to find savings, while borrowing more money to cover infrastructure costs.
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he → promise → costs
Mr. Bradford accuses Ms. Chow of taking a record amount of money from other governments and still failing to deal with the city’s financial woes – while its transit system, parks and roads languish.
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system → accuse → woes
In an interview, Mr. Alexander said he would push city staff to find the $130-million needed to cover the cost of his tax freeze.
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he → say → freeze
He argued he would be a better negotiator in seeking a more comprehensive, permanent arrangement involving both Queen’s Park and Ottawa.
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he → argue → Park
He said that could perhaps involve some sort of constitutional change to give the city more power, an idea others have suggested but that has gone nowhere in the past.
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that → say → past
…and 15 more, not listed.
The Aporia
