Without funding from the federal government, the City of Toronto may remedy its operating budget shortfalls through further property tax hikes and service cuts.

Speaking at City Hall on March 29, Toronto Deputy Mayor Jennifer McKelvie said the measures may be necessary after the Government of Canada's budget failed to deliver on a request for $235M to address outstanding 2022 COVID-19 shortfalls, as well as a promise to assist with the $933M shortfall in the City's 2023 budget, which is also attributable to ongoing COVID-19 costs.

The deficits are "almost entirely" due to a decline in TTC ridership and the increased cost of shelter for the city's homeless population throughout the pandemic.

"We have been very clear to the Government of Canada what the City's needs are and about the importance of supporting Toronto, the country's economic engine," McKelvie said. "While I hope that we can still find a way for our two governments to work together in this interim period to address Toronto's immediate budget issues, this message will be delivered in every 2023 final property tax notice."

Last December, City Council voted to request that the federal government honour its election campaign commitment to help address Toronto's 2022 budget shortfalls. Should the feds fail to do so, Council directed the chief financial officer and treasurer to include the impact of the lack of funding in the 2023 property tax notices.

"It's going to be a big awakening for Toronto residents to see that in their tax bill when it arrives," McKelvie said. "I'm really, really hopeful that we can get this conversation going with the federal government so we can help the people of Toronto."

As the budget pressures mounts, the City could scale back on state-of-good-repair work and implement service cuts "rapidly" in 2024. Exactly what services are affected will be decided through next year's budget process, the Deputy Mayor said.

Toronto's 2023 operating budget included a 5.5% property tax hike, the largest increase since amalgamation. Thanks to a previously approved 1.5% hike to the City Building Levy, though, homeowners will actually face a 7% property tax increase this year.