Toronto’s land transfer tax, which Mayor Rob Ford wants to scrap, will contribute $80 million more to city coffers in 2011 than estimated.

In a report to the budget committee, finance staff project the tax windfall and cost cuts mean there will be a $139.3 million surplus left over at the end of this year. That’s money that will make it easier to balance the 2012 budget.

The large surplus results in part from a hiring freeze and other cost-saving measures, but most comes from the higher tax haul.

“It’s been a hot real estate year,” said Councillor Adam Vaughan, whose downtown ward has seen a condominium building boom.

Ford campaigned for office last year on terminating the land transfer tax, brought in by former mayor David Miller after he won increased powers to levy taxes from the provincial government.

But critics say the tax, expected to yield a total of $300 million in 2011, is needed to take the pressure off the property tax.

“Yesterday, I would have said Mayor Ford was crazy to want to cancel the land transfer tax. Today, I’d say he’s absolutely crazy to want to cancel the tax,” said Councillor Gord Perks.

Perks and other administration critics have accused the mayor of scare-mongering by suggesting a 35 percent property tax hike may be needed to balance next year’s budget.

“It’s the land transfer tax that’s keeping the city afloat, and making sure we can provide good services without big tax increases.”

Ford did not respond to the Star’s request for comment.

A Ford ally, Councillor Doug Holyday, said the city’s budget shouldn’t be dependent on the real estate market.

“Big surpluses are great when they happen, but they don’t always happen,” said Holyday, chair of council’s audit committee. “We have to solve our problems in other ways.

“I would like to see that tax gone.”

Still, Holyday doesn’t believe it will be abolished in 2012 and said he hasn’t heard a target date. Ford’s campaign platform called for getting rid of it by the end of 2011, but the mayor later hedged on timing.

Council should vote to keep the tax, said Councillor Joe Mihevc.

“It’s big bucks. We are heavily dependent on that revenue. The mayor still has it in his agenda to cut this tax. We need to understand that and make sure it doesn’t happen.

One of the advantages of the land transfer tax is that most voters don’t pay it.

“If you’re a real estate speculator, you’re upset, or if you’re a real estate agent you’re upset because all you’re interesting in is buying and selling property,” Vaughan said.

“But if you’re a citizen, it’s going to allow us to weather the storm. The truth is, it’s a good tax that evens out the peaks and valleys in the budget.”

Holyday said Ford hasn’t talked much about the tax recently because the goal is to cut costs first.

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“The difficulty is losing the revenue before you’ve reduced your expenses,” he said. “Let’s see how far we can go in reducing expenses.”

Holyday and other Ford backers say the city did too much hiring under Miller. He would like to see the payroll cut by 7,000 employees.

The budget report said that as of June 30, the city had 47,460 full time employees and 4,177 part-timers. That’s a drop of 1,967 workers, mostly due to not filling vacancies.

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