Toronto Mayor John Tory is set to endorse a controversial introduction of road tolls on the Gardiner Expressway and Don Valley Parkway to raise $300 million a year for his cash-starved government, the Star has learned.

Tory is expected to make the daring declaration in a luncheon speech shortly after the Thursday release of city staff reports recommending highway tolling, along with other so-called revenue tools including a new tax on hotel stays. The reports will also make clear, sources say, that a yearlong push to privatize Toronto Hydro is dead.

Tory spokeswoman Amanda Galbraith refused comment late Wednesday on the tolls proposal. Earlier she was likewise mum on new taxes and fees that city manager Peter Wallace has warned are needed to avoid deep budget cuts as the booming city struggles to close the gap between annual spending and revenues.

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“For too long, we have been underinvesting in our city, making life harder for everyone. And that can’t go on,” Galbraith said, adding Tory will propose “bold” measures while speaking to the Toronto Region Board of Trade.

“The mayor will be standing up and announcing his plan to give us the money we need to build transit and protect city services.”

Related: John Tory set to back tax on hotels, short-term rentals

It was unclear when or how Tory, who plans to run for re-election in 2018, will propose road tolls be introduced.

During his successful 2014 election campaign, he rejected them. However, earlier this year, faced with a cash crunch and almost $30 billion in unfunded, council-approved capital projects, he stopped ruling out tolls.

A September 2015 city staff report proposed drivers pay a flat fee, for a single trip on either or both roads, of between $1.25 and $3.25, with trucks paying double. Alternatively, council could adopt a distance-based system with drivers paying between 10 cents and 35 cents per kilometre and trucks double, the report said.

A weekday average of about 228,000 vehicles used the Gardiner east of Highway 427, that report said, while 110,000 drivers used the DVP north of the Bayview Ave./Bloor St. interchange.

In March, city staff issued a call for a consultant to report on suitable tolling technologies and potential impacts of road pricing on the two highways. That as-yet-unreleased report was to look at how to fund the $2-billion-plus cost of rebuilding east Gardiner while also reducing gridlock and generating cash for other infrastructure projects.

The feasibility study was to include financial targets over a 30-year timeline, assuming tolls would not be charged until 2024 at earliest.

While the City of Toronto Act opens the door to tolls, Ontario regulations are required before implementation.

Provincial sources tell the Star that Tory is expected to say all motorists who use the freeways would pay if city council goes along with his proposal.

The $300 million in forecast toll revenues would be spent only on road and transit projects — such as the Scarborough subway, SmartTrack and a proposed downtown relief line — and not go into general city revenues.

While insiders say Premier Kathleen Wynne privately assured Tory last summer that she would not stand in the way of a toll plan, ‎the stage could still be set for a showdown between Queen’s Park and City Hall.

With Wynne’s struggling Liberals headed to the polls four months before the October 2018 civic election, there are concerns at the province about the optics of endorsing a controversial new fee.

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The Liberals hold nearly all the seats in the Greater Toronto Area so MPPs are bracing for an earful from constituents already angry about rising electricity costs and other pocketbook issues.

However Wynne, who is selling the province’s majority share of the Hydro One transmission utility to bankroll new transit, shares Tory’s view that a massive infusion of money is needed to build infrastructure.

Politically the tolls could be challenging for the premier — in January the Liberals are raising gasoline prices by 4.3 cents a litre and natural gas by an average of $5 a month with proceeds aimed at initiatives to fight climate change.

Tolling drivers is also a huge political risk for Tory, viewed by many as governing midway into his first term catering to the concerns of suburban drivers. He might face a 2018 mayoral fight with ex-councillor Doug Ford, who would be certain to pounce on a tolling proposal.

The Star has learned Wallace’s reports will recommend city council resurrect the vehicle registration tax — enacted at $60 under former mayor David Miller in 2007 and killed under Miller’s successor, Rob Ford, in 2011 — but that Tory will categorically reject that idea.

Tory is expected to endorse a tax applied to all nightly stays in hotels and accommodations, including short-term rentals on websites such as Airbnb.

Wallace has warned that, after years of below-inflation property tax hikes, Toronto desperately needs new sources of cash or council will have to impose dramatic cuts to close the gap between annual spending and revenues.

Tory’s plan to stake his political future on tolls comes as another controversial revenue-generation proposal, selling a sizable portion of Toronto Hydro, is yanked off the table.

Sources say Wallace will recommend that council not sell either the 105-year-old electricity distribution utility or Toronto Parking Authority, which operates Green P lots and on-street parking, for one-time windfalls of cash.

Instead, Wallace will recommend, and Tory will endorse, a novel arrangement to invest $200 million in Toronto Hydro to end the utility’s cash-flow crisis while also boosting Hydro’s annual dividend to help city council balance the overall budget in 2017 and beyond.

Sources with knowledge of the plan say council would transfer the $200 million from a city capital reserve fund to Hydro. In return, Hydro would boost its dividend — which the Hydro board recently voted to slash from almost $60 million a year to $25 million, blowing a hole in the city budget — to about $66 million a year starting in 2017.

Sources said the proposal has a stamp of approval from management consultants Deloitte, hired to work on issues related to Hydro, which has a debt-to-equity ratio high enough to concern the rate-setting Ontario Energy Board and bond-rating agencies that can influence Hydro’s borrowing costs.

With files from Betsy Powell

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