Accept road tolls or make big cuts, Toronto city manager warns

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Either accept a "businesslike" and "fiscally conservative" plan to impose road tolls or start chopping services and erasing plans for new transit lines and other projects, Toronto's top civil servant warned his political masters on Thursday.

Peter Wallace, Toronto's city manager, was presenting a menu of potential new taxes and fees to Mayor John Tory's executive committee to deal with the gaping holes both in the city's operating budget and its $33-billion list of unfunded transit lines and other projects.

"If city council is unwilling to endorse this incremental revenue tool [tolls] in order to fix and begin to address the yawning gap between what you promised and what you're willing to fund, then you had better be ready to give me the alternative instructions that you have not given to city managers for at least the last six years, which is an actual reduction in the capital plans," Mr. Wallace said.

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Mr. Wallace's list of recommendations included reviving the city's motor-vehicle registration fee that was cancelled in 2010, looking into taxes on alcohol and asking for special powers to impose income or sales taxes.

But Mr. Tory's hand-picked committee voted unanimously with his push, announced last week, to reject most of Mr. Wallace's recommendations and support just tolls for the Gardiner Expressway and the Don Valley Parkway and a new hotel tax, both of which require provincial approval. The issue goes before city council on Dec. 13.

A list of recommended short-term moves for the 2017 budget, including a previously announced special 0.5-per-cent property tax levy for capital projects, a boost to business taxes and the harmonizing of the city's land-transfer tax with recent provincial changes, was referred to the budget committee for more discussion.

Councillor Gord Perks, a left-wing critic of the mayor, argues Mr. Tory's moves simply won't generate anywhere near enough to fund Toronto's current needs, let alone the billions required for the mayor's signature Smart Track transit plan or the proposed downtown rail deck park.

"Kudos to the mayor for opening the conversation, but don't tell Torontonians that you've solved the problem when you haven't," Mr. Perks told reporters, arguing the city needs to hike its property taxes to the levels in other nearby municipalities and seek permission to charge its own income tax and sales tax.

Mr. Tory and his allies have been adamant that property taxes cannot rise above the rate of inflation, forcing the city to look for new revenue sources. He has said toll revenue would be dedicated to paying for the upkeep of the DVP and Gardiner, with the leftovers dedicated to public transit. (The most recent cost estimates now peg the rehabilitation of the Gardiner alone at a billion dollars more than projected, up to $3.6-billion from $2.6-billion.)

While Mr. Tory's office believes it can win a vote on tolls at council, critics on his right and left have been mobilizing. Councillor Giorgio Mammoliti, who opposes any new taxes, showed up to the committee on Thursday with a pair of boxing gloves. Some on city council's left argue that tolls hurt poorer drivers more than the rich.

Mr. Tory's deputy mayor, Denzil Minnan-Wong, whose ward straddles the DVP, voted for the tolling concept, but he criticized the proposal and warned it could cost some families an extra $1,000 a year. He moved a motion calling for the city to study an annual cap on the tolls Toronto residents would pay.

If approved, how the tolls would work is still an open question. They would likely be imposed electronically with gantries of cameras similar to those on Highway 407, and could be implemented as early as 2019 or 2020. Mr. Tory said he is open to toll prices that would fluctuate depending on the time of day.

But setting up the system would not be cheap. City staff suggest a tolling system could cost up to $150-million up front, and $50-million to $70-million to operate each year. The city projects that a per-trip toll of $2 would raise $166-million a year, while one set at $3.90 would raise $272-million and a $5.20 toll would bring in $336-million, over and above the costs of maintaining the two expressways.