Freeland rejects Toronto bailout, says Ontario in ‘excellent fiscal position’ to help

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Deputy Prime Minister Chrystia Freeland is rejecting Toronto’s request for a bailout to address the city’s financial shortfalls, instead suggesting that the Ontario government is in an “excellent fiscal position” to help.

In a letter sent Monday to Toronto Mayor Olivia Chow, Ms. Freeland, who is also the federal Finance Minister and Toronto-area MP, said Ottawa has provided more support to Toronto than any government in history, including investments totalling $6.14-billion over the past eight years. She argued that billions spent by the federal government during the pandemic helped bolster the province’s finances. The province is forecasting a budget surplus of $4.4-billion by 2025-26.

“The Province of Ontario has both the constitutional responsibility and the fiscal capacity to support Toronto. It is our firm expectation that they will do so,” she wrote.

The letter from Ms. Freeland comes as Ms. Chow and Premier Doug Ford have been calling on Ottawa to fund more shelter spaces for a growing number of refugee claimants arriving in Toronto and surrounding municipalities. About 300 people are turned away from Toronto’s 9,000-bed shelter system nightly because of a lack of space, the city says, roughly half of them being asylum seekers.

Many of these asylum seekers, mostly from African countries, were sleeping on the streets outside a downtown intake centre for weeks. Last Monday, the Black Community Housing Advisory Table and other Black-led groups organized temporary shelter at two churches in North York.

After pressure from the city and refugee advocacy groups, Ottawa announced last week that it is giving Toronto $97-million to provide shelter spaces for the asylum seekers who have been sleeping on the streets. The funding is part of a larger, $212-million extension of the Interim Housing Assistance Program across the country until March.

The money promised last Tuesday stops short of Toronto’s request. The city said it needs $157-million this year to pay for 3,100 beds that have already been added specifically for refugee claimants, as well as additional funding to shelter those sleeping on the streets. A day after the federal funding announcement, Toronto said it would open 150 hotel spaces and urgently look to find an additional 100 spaces for the refugee claimants. As of Monday, the city said 212 asylum seekers have been referred to an indoor space at two hotels and an emergency shelter.

Ms. Chow and Mr. Ford also announced they would spend $6.67-million each this year on expanding a rent-supplement program for people currently experiencing homelessness, which is expected to provide housing for upwards of 1,350 families. They asked Ottawa to provide $26.7-million in funding to join their contributions in expanding the program.

In a statement Monday, Ms. Chow called Ms. Freeland’s letter “finger-pointing” and said she remains hopeful the federal government will partner with the city and provide the money being requested.

Caitlin Clark, a spokeswoman for Ontario Premier Doug Ford, said Ontario has “stepped up” with $3.3-billion in operational funding for the city this year and also fulfilled Toronto’s request of $235-million to address the city’s 2022 COVID-19-related budget pressures. The federal government didn’t match this request. Neither Ontario nor Ottawa have committed to provide extra funding to close this year’s projected gap.

“We hope the federal government and Toronto can work together to find a solution,” Ms. Clark said in a statement.

In her letter, Ms. Freeland also pointed to Toronto’s reserve funds as an option to cover unanticipated costs, but those have been mostly committed.

A report to council’s executive committee earlier this month showed Toronto ended 2022 with $5.4-billion in reserves, but about 95 per cent has already been allocated to future operating expenses or council-directed commitments.

This includes a backstop with just over $1-billion remaining to specifically address COVID-19 financial pressures, including reduced transit revenues and increased costs to provide more shelter spaces. The city is currently projecting a budget shortfall this year of more than $900-million and would need to use up most of this backstop if funding isn’t given by the province or Ottawa.

If the backstop were to be used, city officials warn they won’t be able to address any emerging costs or COVID-19 fiscal pressures in future years.