In letter to Chow, Freeland puts Toronto budget bailout on province’s shoulders

Toronto Mayor Olivia Chow on Monday accused the federal government of Canada’s deputy prime minister for shouldering the burden of supporting the pandemic-ravaged finances of the provinces.

Deputy Premier Chrystia Freeland’s two-page letter to Chou on Monday in response to the city of Toronto’s request for additional aid did not include any new promises of federal funds. Mr. Freeland suggested the city could draw on its own savings or look to the state.

Freeland, who is also federal finance minister, said the Ontario government has a constitutional responsibility and financial capacity to support Toronto.

“We very much hope that they will,” she said in a letter to Mr. Chow.

Zhou said in a statement Monday that the ministry had indicated its willingness to partner with the city.

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“Despite today’s accusations, I continue to expect the federal government to join us,” she said.

The letter is the latest development in an ongoing debate between various levels of government over how to address Toronto’s pandemic-related budget shortfall.

Mr. Zhou inherited a nearly $1 billion budget shortfall, largely related to declining transportation revenues and rising shelter costs.

Toronto may be able to fill the void in this year’s budget by removing most of its remaining COVID-19 funds, which it has partly scraped from its already inflated capital budget, according to a staff report.

But how the city will fund a budget shortfall estimated at up to $927 million next year remains an open question.

The mayor plans to convene a temporary executive committee next month to work on the city’s long-term financial plan.

Freeland’s letter said there were limits to the federal government’s ability to provide assistance. She credited Ontario’s “excellent financial position” to federal pandemic emergency assistance.

“Mayor Chow, our government has been and will continue to be a committed partner to the City of Toronto,” Freeland wrote in the letter.

“But our federal capacity is not limitless.

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The Ontario Department of Finance and Accounts expects the state budget to post a surplus of $10.6 billion by fiscal 2025-2026, topping the government’s forecast of a surplus of $4.4 billion.

In response to the letter, Prime Minister Doug Ford’s office diverted to the federal government. A statement from a spokesperson for his office did not mention new support for the City of Toronto’s budget shortfall, saying the city’s request for additional funding was directed to the federal government.

“We hope the federal government and Toronto can work together to find a solution,” the statement said.

Freeland, meanwhile, wrote that Toronto’s $11.2 billion provident fund has an estimated $1.6 billion uncommitted “stabilization” fund, set aside for emergencies and unforeseen costs.

But a recent city report shows that figure is much lower, showing that all but $290 million of the reserve fund went to support the city’s 10-year operations and capital plans.

Chou officially took office earlier this month after completing a by-election campaign and pledged to work with other major cities to obtain new financial agreements for municipalities.

Click to play video: Refugees seeking shelter while waiting for government

Refugees seeking shelter awaiting government

Officials have long said Canada’s most populous city deserves its own financial consideration given the enormous role it plays in community services, from transportation to shelter to housing assistance.

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Chou welcomed the federal government’s promise last week to provide $97 million to help Toronto’s asylum applicants, but said it wasn’t enough to meet the city’s needs given the rising number of applicants and the asylum system operating at full capacity.

She worked with Ford to ask the federal government to add another $26.7 million to programs that provide rental housing subsidies.

The mayor has suggested that the new federal budget will be used to open about 250 shelter spaces for asylum seekers in the city.

“When we recently worked together to protect refugees, we saw some immediate short-term successes. We need continued partnerships like this to provide the people of Toronto with affordable housing, fast and reliable transportation, and excellent public services for years to come,” Chow said.

Freeland’s letter, referring to last week’s announcement, said the federal government had pledged $1.86 billion to the city this year through various programs, including funding public transportation, infrastructure and addiction programs, with that amount expected to rise to $2.3 billion next year.

— with files from Nojoud Al Mallees

© 2023 Canadian Press

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