Toronto’s city manager is recommending across-the-board spending cuts or freezes for 2017 that, if implemented, could trigger cuts to services enjoyed by residents.

Peter Wallace, who last month warned Toronto needs new taxes or fees, on Friday released direction for the budget committee that is about to start work on the operating and capital budgets.

Since any new “revenue tools” will not be approved any time soon, Wallace offered options to deal with the increasing gap between city revenues and expenses:

Across-the-board budget reduction targets of 2.6 per cent for all city programs and agencies.

Or 5.1 per cent reduction targets for programs and agencies except for the police, TTC and Toronto Community Housing, which would see their budgets frozen.

Or 3.8 per cent reduction targets for programs and agencies, but freezes for police and Toronto Community Housing and a 4.1 per cent reduction for the TTC to “absorb incremental debt servicing for its capital costs.”

Councillor Gord Perks, a left-leaning budget watcher on council, said Wallace is making plain to Mayor John Tory, and his budget committee led by Councillor Gary Crawford, that sticking to a pledge to keep property tax increases at or below the rate of inflation translates into significant service cuts.

“This is city staff telling the mayor and members of his hand-picked budget committee that you cannot have your cake and eat it too,” Perks said in an interview.

“If they stick to their pledge on property taxes, we are going to have to make historic cuts to programs. This would amount to the largest cut to the TTC that I have seen since 1996.”

Crawford pooh-poohed that prediction, saying of the options he likely supports the first one, for across-the-board cuts. The budget chief noted many departments met a direction last year to find 2 per cent in savings.

“It will be a difficult year absolutely,” he said. “But this isn't about cutting services — it’s about modernizing and restructuring and looking at new, more efficient ways to provide services to Torontonians.”

TTC spokesperson Brad Ross said he wouldn’t speculate about what effect a budget freeze or reduction would have on transit service. But in 2012, the commission lowered its crowding standards and cut service on dozens of bus routes to meet then mayor Rob Ford’s edict that all departments cut their spending by 10 per cent.

“I don’t want to be alarmist. We need to examine this before we say anything around service,” Ross said.

According to Ross there are several ways the commission could cut costs before it looked at reducing service, including limiting employees’ lost time injuries and controlling fuel costs.

Wallace’s report noted that the commission is facing $178 million in budget pressure next year just to maintain service at current levels.

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The number of trips taken on the system continues to rise, although not at the pace that the commission expected. At current rates, the agency projects it will have 540 million to 545 million customers by the end of 2016, up slightly from 538 million last year.