A former top bureaucrat with the Ontario government is in line to ‎be Toronto's next city manager, sources say.

Peter Wallace, a former Ontario secretary of the cabinet who played a key role in exposing the scandal involving an alleged data purge in Dalton McGuinty's office, has been tapped to be Toronto's top civil servant, according to two separate sources with knowledge of the search. The appointment is subject to council approval next week.

When asked on Thursday about the search to replace outgoing city manager Joe Pennachetti, Mayor John Tory said the selection panel has landed on a candidate, although he said the name would not be released until council approved it. Mr. Pennachetti is about to retire after six years in his post.

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Mr. Wallace retired as head of the Ontario bureaucracy last year after more than 30 years working for the province. Since then, he has been a visiting fellow with the University of Toronto's School of Public Policy and Governance.

While serving as Ontario's top bureaucrat, Mr. Wallace repeatedly warned the Liberal government its plan for balancing the budget would require significant program cuts.

In one 2011 memo reported by The Globe and Mail at the time, Mr. Wallace wrote that the government's targets were so ambitious "it's not even funny. ... More directly, this is more gravy than [Toronto mayor Rob] Ford even promised to look for."

He also made headlines after telling the province's information and privacy commissioner in 2013 that Mr. McGuinty's former chief of staff, David Livingston, had once made inquiries about wiping computer hard drives. That led to a police investigation of Mr. Livingston, and the scandal over the alleged destruction of documents in the premier's office.

Although a spokeswoman for Premier Kathleen Wynne said when Mr. Wallace left that his retirement was voluntary, sources told The Globe the decision came after significant tension between the Premier and the bureaucrat.

In his time with the Ontario government, Mr. Wallace also was a deputy minister of finance, deputy minister of energy, assistant deputy minister at the Ministry of Natural Resources, and assistant deputy minister at the Management Board Secretariat.

If selected, Mr. Wallace will take over the city bureaucracy at a crucial point. Toronto's 2015 budget, passed last month, relied on the city borrowing from its own capital reserves to balance the books – due in large part to the province's cancellation of a $129-million fund. But CFO Rob Rossini has warned that the city is facing a $250-million funding shortfall for next year.