As Toronto councillors do their annual budget-balancing contortions, the departing city manager says it’s time to consider a local sales tax or other revenue source to properly fund the rapidly growing metropolis.

“We are probably the only city of three million residents and more in the world that funds all of its services from property taxes,” Joe Pennachetti, who retires April 30, told reporters as the budget committee met.

Noting he was voicing a personal opinion and is subject to the will of council, Pennachetti said there “has to be change at some point” for Toronto to cope with pressures from housing, transit, social services and more.

“From my viewpoint, maybe not tomorrow but in the long term, we need sales tax.”

Pennachetti is in early talks with the province about updating the City of Toronto Act, and said it would be helpful by mid-March to know if councillors want him to push for new powers, including the ability to levy a sales or income tax.

Toronto, which has property tax rates significantly lower than other GTA municipalities, gained the power under the act to impose new charges on gasoline, parking spots and more.

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However, in 2013, a majority of city councillors could not agree to impose any of those measures, despite a recommendation by city staff to use one or more to pay for badly needed transit expansion.

While some councillors welcomed renewed discussions about “revenue tools,” Mayor John Tory and budget chief Councillor Gary Crawford both quickly slammed the door on the idea.

“The city has no power to institute a sales tax and we have no plans to do either,” Tory’s spokeswoman, Amanda Galbraith, said on Twitter.

Crawford told reporters: “We’re not focusing on revenue tools, we’re focusing on how to we deal within our own house . . . I’m not supportive of those kinds of taxes or revenue tools, no — sales, income.”

Still, Councillor Shelley Carroll, a budget chief under former mayor David Miller who has been supportive of Tory’s fiscal efforts so far, said she will table motions to restart the debate about new revenue sources, and to reintroduce the $60 vehicle registration tax killed by council in 2011.

At budget townhalls across the city, “people are saying: ‘You need to look at revenue tools,’” Carroll said. “They used to mock the term.”

Toronto must compare its revenue sources to those of Chicago and New York City, she said. Most big American cities have much broader taxation powers, as well as different areas of responsibility.

New York City, for example, has a property tax, dedicated income and sales taxes, and taxes on cigarettes, hotel rooms and taxis.

The backdrop for Toronto’s talk of a long-term fix is Tory’s third stab at fixing a gaping hole in the proposed 2015 budget with a solution that will allow him to live up to his 2014 campaign promise to keep taxes at or below the rate of inflation.

Tory and Crawford are proposing that the city essentially borrow from itself to deal with the phase-out of provincial housing grants.

The city would reduce funds flowing from the operating budget to the city’s capital budget by $130 million over three years, and make $25 million in cuts. Instead of borrowing from the province or a bank to cover the $130 million gap, the city would borrow from itself, to be paid back over six years.

But next year, budget pressures will only intensify, with the city forced to find $69.3 million in savings — or $44 million, if this year’s cuts remain intact.

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On CBC Radio on Friday, pressed on a long-term fix for Toronto’s finances, Tory said taxpayers can rely on his “steely determination” to find efficiencies, balance the books and keep taxes low.

Councillor Gord Perks argued that city council should hike property taxes this year to deal, forever, with the loss of the provincial housing grants. The city says that would amount to a 5.6 per cent hike, or $145.77 on the average Toronto home assessed at $524,833.

“One day, council will wake up to the fact that Torontonians are grown up enough to pay for the services they receive,” Perks said.

The budget committee will finish its deliberations Feb. 20. The budget then goes to the executive committee and city council for final approval in March.