City can't rule out 'second tax bill' or service cuts amid provincial funding changes

More taxes. Service cuts. Or a combination of both.

Those are the outcomes facing Toronto — and its residents — if Premier Doug Ford's government doesn't heed council's call to reverse sweeping funding cuts causing a nearly $180-million shortfall this year alone, city officials say.

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"You can't rule out there being a second tax bill," city manager Chris Murray told council on Tuesday amid debate over the impact of funding changes to various areas, including child care and public health.

If the province expects the city to address the shortfall through efficiencies alone without impacting services, he added, "I don't believe that's possible."

In a 25-1 vote — with only Premier Ford's nephew, Coun. Michael Ford, voting against — councillors backed a motion from Mayor John Tory which calls on the province to reverse the "unilateral, retroactive" cuts to the city's 2019 budget.

The motion also requests Murray to report back this summer on the "service cuts and tax changes" that may be required to balance the budget if the cuts remain in place.

"We're finding ourselves between a rock and a rock," Murray said in council chambers.

Speaking to reporters before the meeting, Tory said the province's piecemeal approach to sharing details of funding changes amounts to "torture by a thousand cuts." 

So far, the changes are leading to lost funding for this year's budget, totaling roughly $65 million for Toronto Public Health, $85 million for children's services, $3.9 million for Toronto Paramedic Services and $24 million from the cancellation of a planned hike to Toronto's share of gas tax revenue, according to city calculations.

With the green light from council, city staff will begin working on a report exploring options to address this financial gap, which could include opening up the budget that was approved back in March, city spokesperson Brad Ross told CBC Toronto.

If the budget is re-opened and amended to change property taxes, "mailing an amended tax bill is one option that may be considered," Ross wrote in a statement, adding staff will assess all available options.

Tory: Funding cuts 'unprecedented'

The city also isn't clear on when the list of funding changes comes to an end, Tory said, calling it both an "unprecedented" and "destabilizing" situation.

One of the latest provincial changes is an additional $20-million decrease in funding for the upcoming Toronto regional public health entity for 2020, compared to the year before — a detail made public through Murray's latest report to council on Tuesday.

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The cut is being justified as an "administrative efficiency" by the province, board of health chair Joe Cressy said.

According to Murray's report, the funding drop comes even though Toronto Public Health is not being consolidated with any other regional public health branch, and goes above and beyond the cost-sharing changes already reported. Those changes amount to $21 million in lost funding in 2020 for the city's operating budget, with the province reducing its share, according to city numbers.

Assuming the city's contribution remains static, the financial impact on Toronto Public Health would be $86 million by 2020 and more than $100 million each year after 2022, the report continues, not counting additional changes beyond the new cost-sharing model.

"If the cuts as proposed proceed, I would put to council that every program offered by Toronto Public Health is at risk," medical officer of health Dr. Eileen De Villa said in council chambers. "The cuts are significant enough."

According to the Ministry of Health, while there is "no change" to the updated cost-sharing arrangement next year, the province has been clear that all public health units are expected to "thoroughly review spending."

A spokesperson also stressed that budget decisions beyond the next year have not been made yet and will be informed by discussions at technical working groups, which are launching shortly.

The Ford government has also previously disputed the city's calculations on the funding impact stemming from provincial changes.