The federal government has agreed to join efforts by Toronto and Ontario to tackle long-running budget problems at the country’s biggest city.
Toronto is facing a $1.5-billion operating shortfall next year, as it begins a public consultation process that will lead to its 2024 budget. By law, the city can’t run an operating deficit. Municipal officials have warned that, after years of pandemic-wrecked revenues and increased costs, Toronto has few reserves left.
Toronto and Ontario formed a working group in mid-September aimed at striking a new financial deal that would address what both levels of government have identified as a structural deficit. The city and the provincial government had been pleading with Ottawa to participate in this effort.
Until this week, the federal government had ducked these calls, pointing to past support and noting that municipalities are the responsibility of provinces.
On Tuesday, though, federal Finance Minister and Deputy Prime Minister Chrystia Freeland said Ottawa would come to the table.
“We agreed to join the working group, and the deputy minister of finance, Chris Forbes, will be joining that group,” Ms. Freeland told reporters at a news conference.
She made the announcement one day after Toronto Mayor Olivia Chow and Ontario Premier Doug Ford again reiterated their desire to have Ottawa participate. In a joint statement Monday, they warned that Toronto’s difficulties cannot be ignored.
“Left unsolved, the problems the city faces, including housing asylum seekers, spill over into the broader region,” they wrote. “When Toronto wins, Canada wins.”
In a statement Tuesday after Ms. Freeland’s announcement, Ms. Chow’s press secretary Arianne Robinson said the mayor was optimistic.
“She’s happy to see the federal government signalling that they understand Toronto’s significant structural financial challenges and are willing to work with us to solve them,” Ms. Robinson said.
In a post on the social media site X, formerly known as Twitter, Mr. Ford added his appreciation.
“Toronto is a major economic driver for Canada, but it can contribute so much more,” he wrote. “That’s why we’re working together to put the city on a path toward growth and success.”
The Toronto budget working group is set to issue a report in late November. Under its terms of reference, the working group is to avoid new taxes or cuts to front-line services. It is being chaired by Toronto city manager Paul Johnson and Ontario deputy minister of finance Greg Orencsak.
Possible solutions that have been floated by politicians and commentators include giving the city a small slice of GST revenues or uploading financial responsibility for two regional highways to the province.
With reports from Bill Curry and Laura Stone