New Deal for Cities Backgrounder

In preparation for tonight’s public BWVRA meeting, we’ve developed a short backgrounder on the New Deal for Cities.

You can view the backgrounder as a Word document (2 pages, 117kb) if you’d like to print it, or click “read the rest of this entry” to see it online.


The New Deal for Cities embraces three broad aspects: legislative powers, funding transfers and governance.

The City of Toronto functions as a creature of Queen’s Park. The City does not have the authority to implement a range of decisions, from the location of stop signs to ultimate control of how our city manages growth. Further, Toronto cannot implement new programs, services or infrastructure renewal outside a balanced budget. The municipality is also responsible for delivering the following public services: social assistance (while contributing 20 per cent of overall funding), transit, childcare, numerous health services and housing. These services are currently financed by local taxpayers without benefit of reciprocal funding arrangements with senior levels of government.

Property taxes and periodic transfer payments are the major source of revenue for the city. The province sets the property tax classes and regulates rates. Changes to the local property tax system must first have provincial approval. Toronto is prohibited to implement any new taxes that might grow with the overall economy. Downloading services to the city saves the province more than $200 million each year.

The current revenue arrangement is inadequate and unsustainable for a city like Toronto competing in an international environment. The Conference Board of Canada has estimated that Toronto faces a $1.1 billion operating and capital shortfall between 2006-2025 under the current rules. All the while, citizens and businesses of Toronto send $10 billion in taxes annually to Ottawa and Queen’s Park.

Toronto needs the appropriate powers and money to be able to meet the needs of its citizens in a way that is effective and efficient. That means rebalancing of the programs that the city delivers and the ways the city pays for them.

For example:

Should programs be “uploaded” back to the province?

Should programs be kept but new revenues assigned to the city?

What revenues does the city require to meet its needs? How should they be provided: income-tax sharing? The city’s own income tax scheme? Gas points? More user fees?

Ultimately, these questions can be framed in a way that asks: How can we ensure stable yet flexible funding to meet the unique needs of our city?

All of this must be done in a governance model that is accountable, transparent and accessible to citizens. Does the current council structure work best, whereby the Mayor is first-among-equals? Is there a role for an executive committee of council? What of the role of community councils? Does talk of changes in government structure simply mask Toronto’s real problems of a lack of power and revenue streams?

The New Deal for Cities encompasses our relationship with the federal and provincial governments. Legislatively, however, the future of the City of Toronto is bound closely to the provincial City of Toronto Act, 1997 which was introduced eight years ago to implement amalgamation.

To its credit the provincial government has recognized there are problems and has agreed to negotiate with Toronto to modify the Act. To this end, a task force was struck in September 2004, the Joint Ontario-City of Toronto Task Force to Review the City of Toronto Act 1997, and other Private (Special) Legislation, co-chaired by the deputy minister of municipal affairs (John Burke) and Chief Administrative Officer for the City of Toronto (Shirley Hoy).

The purpose of the review process is to “develop recommendations for a modernized City of Toronto Act that provides Ontario’s capital city with an enabling legislative framework commensurate with its responsibilities, size and significance to the province.

Related objectives of the review include:

· To make the City of Toronto more fiscally sustainable, autonomous, and accountable
· To provide the city with the tools it needs to thrive in a global economy
· To reshape the relationship between Ontario and its capital city

Target date for introduction of the new legislation is by year’s end, 2005.

What is the current status of the task force? Negotiations have been underway for nine months and by most accounts have been making some headway. In a progress report released last month Burke and Hoy write positively of the fact that they have “working in a spirit of partnership and cooperation to a culturally vibrant, economically strong and environmentally sustainable Toronto …”

Substantive progress appears to be represented by “two significant conclusions that will serve as the basis of (the task force’s) final recommendations, regarding modernized City of Toronto Act:

· The modernized City of Toronto Act should effectively function as the City’s “charter” by replacing the Municipal Act 2001, the City of Toronto Act, 1997 (No. 1 & No. 2), and most (if not all) of the 350 private acts that currently apply to the City;

· The modernized City of Toronto Act should start from the premise that Toronto can exercise broad permissive governmental powers within its jurisdiction, subject only to specific exceptions in the provincial interest …

Mayor David Miller has responded positively to the progress report and has been quoted as saying, “What we have is for the first time the Province of Ontario acknowledging that the City of Toronto is different and needs proper powers to meet the needs of its residents.” He called the negotiations, “groundbreaking.”

Former mayor John Sewell was considerably less upbeat. He was quoted as saying, “the report is disappointingly thin. It sets out two bland conclusions which many assumed were beginning premises. It’s hard not to see this as a giant missed opportunity.”

In April, 1999, at a public forum on the future of Toronto, Joe Berridge, a Torontonian and world-renowned urban planner made it clear that the economic and legislative framework within which Toronto operates is extremely important, but not just in comparison to other Canadian cities. He said that in an era in which Toronto must compete against North American and international cities, the City requires a framework which is up to the task.

“As Toronto becomes a North American city the behaviour and resources of its immediate competitors create the environment in which it will succeed or fail. In order to continue as a world city … we have to invest in our city at the level and standard set by the rest of the world rather than by those of the local or Canadian political environment …”