politics City Manager Sounds Alarm on Toronto’s Future

Toronto's top civil servant warns that the City is facing a funding crisis.

This past Tuesday during a speech he gave at U of T’s Institute on Municipal Finance and Governance, city manager Joe Pennachetti sounded the alarm on the City’s structural funding gap. Pennachetti is the City’s top civil servant, and his warning—that the City will need $500 million more in annual funding, whether through 1 per cent of the City’s contribution to the sales tax, transfer payments from other orders of government, or the uploading of services—is urgent, serious, and deserves more attention.

Pennachetti has made this point before, but never so explicitly: he spoke of the ticking time bomb that is the City’s housing portfolio, and cautioned that if the City does not get funding from other orders of government in the next few years, the Toronto Community Housing Corporation—facing increasingly serious repair issues—might be forced to evict residents from their homes.

Toronto currently has a housing capital repair backlog of $864 million, a total that has grown by $220 million in the past three years. At current funding levels, the repair backlog will grow to $3.6 billion within 10 years. The TCHC waiting list is longer than it has ever been, with 91,000 on the waiting list for one of TCHC’s 58,000 units—and the wait usually takes between eight and 10 years.

Pennachetti also highlighted looming transit challenges: the TTC currently relies on the fare box more than does any other major North American city, and it has seen its already low subsidy decline by 14 per cent per rider during the current council term. The city manager says the organization also suffers from a lack of operational funding contributions from the provincial government. At the same time, there’s a $2.7-billion unfunded liability when it comes to state of good repair for transit—and Metrolinx estimates that the Greater Toronto and Hamilton region would need an additional $2 billion in ongoing funding just to maintain congestion at current levels.

When it comes to funding big projects like transit or housing, Toronto’s problems are largely structural. No other city in the world, for example, funds a comparable housing portfolio through property tax.

But for all of the criticism of Toronto’s structural problems, there’s also the implicit criticism that Toronto’s civic leaders are not addressing the issue. The items Pennachetti mentioned have been largely ignored by the current crop of mayoral candidates—who have generally preferred to draw transit lines on a map without saying where ongoing funding will come from, or criticize former TCHC CEO Gene Jones’ performance without addressing what kinds of systemic solutions they would support to help residents. These issues have continued to grow during Toronto’s current boom, underscoring the fact that if the City wants to solve these ongoing problems, it must work on sustainable solutions immediately.

But this raises a different kind of structural question: If the political courage to confront these issues won’t come from risk-averse political candidates, who will answer Pennachetti’s warnings?