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“This is not a smart move … By relying on a loan instead of fixing the problem either with increased taxes or decreased services, what this means is we’re going to have to suffer through this punch every year.”

Councillor Janet Davis, another leftist, suggested an extra 3% property tax hike could fill the gap, but admitted there may not be an appetite for that at city council.

“I’m waiting to see what this plan B is. If it’s going to include cuts, or service reductions, I know that I will not be happy with that and many councillors won’t,” she said.

Mr. Tory defended the loan, and assured Torontonians they can trust his fiscal judgment.

“I believe it is entirely financially responsible to take a relatively small, in fact a tiny portion of the budget, and end up having that as a loan for this year,” said Mr. Tory on Thursday. “It allows us to have a balanced budget and it allows us to go ahead with these investments, which I think are urgent.”

The predicament can be traced back to a decision by the provincial Liberals to gradually pull funding that the city used for housing. In 2015, that means a loss of $86-million in a $9.9-billion budget.

Officials in both the mayor’s office and the city manager’s have been working for weeks with provincial counterparts, hoping to convince them to reinstate the funding. The argument has long been that Toronto, a large cosmopolitan city, has a concentration of issues around housing and poverty that other municipalities in the province simply do not face.